Auto Loan Calculator
Work out your monthly car payment, accounting for trade-in value, down payment, and sales tax.
How this calculator works
Sales tax is applied to the price minus your trade-in value, then added to the loan. The remaining balance amortizes at your interest rate over the loan term, same as any fixed-rate loan.
The financed amount is then run through the standard loan amortization formula.
Trade-in value and sales tax
Most US states only charge sales tax on the price minus your trade-in value, which is why trading in a vehicle can meaningfully lower your total loan amount even before considering the trade-in credit itself.
New vs. used car loan rates
Used car loans typically carry higher interest rates than new car loans — often 1-3 percentage points more — since lenders view used vehicles as higher risk due to depreciation and uncertain condition.
Shorter loan terms are generally recommended for used vehicles, since stretching payments over 6-7 years on a car that's already depreciating can leave you owing more than the car is worth for a large part of the loan.
A worked example
A $28,000 car with a $3,000 trade-in and $2,000 down, at 7% sales tax and 6.5% APR over 60 months: taxable amount is $25,000 (price minus trade-in), sales tax is $1,750, and the amount financed is $28,000 minus $2,000 minus $3,000 plus $1,750, or $24,750.
At 6.5% over 60 months, that works out to a monthly payment of about $484, with roughly $4,290 in total interest over the loan.
New vs. used car loan rates
New car loans typically carry lower interest rates than used car loans, since lenders view new vehicles as lower risk collateral. The gap can be a full percentage point or more, which matters on a multi-year loan.
Loan term also affects total cost more than many buyers expect — stretching an auto loan to 72 or 84 months lowers the monthly payment but often means owing more than the car is worth for a significant stretch of the loan, a situation known as being 'underwater' on the loan. If you're weighing buying against leasing instead, compare the numbers with our Lease Calculator.
Frequently asked questions
Does trade-in value reduce sales tax?
In most US states, yes — sales tax is calculated on the price after subtracting your trade-in value, not the full vehicle price.
Should I include destination or dealer fees?
Add them to the vehicle price field for the most accurate financed amount, since they're typically rolled into the loan.
Is it better to lease or finance a car?
Financing builds equity and has no mileage limits, while leasing typically offers lower monthly payments but no ownership at the end — the right choice depends on how long you keep vehicles and how much you drive.
How much should my down payment be?
20% is a common guideline for new cars and 10% for used, though any amount that avoids being 'underwater' (owing more than the car's worth) as it depreciates is reasonable.
Should I choose a shorter or longer auto loan term?
Shorter terms (36-48 months) minimize total interest and reduce the risk of owing more than the car is worth, while longer terms lower the monthly payment at a higher total cost.
Is it worth negotiating the vehicle price separately from financing?
Yes — negotiating price and financing separately, rather than focusing only on the monthly payment, generally leads to a better overall deal since dealers can adjust either variable to hit a target monthly number.