Auto Loan Calculator
Calculate exact monthly car payments, total loan cost, dealer financing options, sales tax, trade-in value, and amortization schedules.
Where the lines cross, the car becomes worth more than you owe on it.
Amortization & Vehicle Value Schedule
Principal paydown, interest, and estimated loan-to-value (LTV) over the life of the loan.
| Period / Year | Starting Balance | Scheduled Payments | Principal Paid | Interest Paid | Ending Balance | Est. Vehicle Value | LTV Ratio |
|---|
Mathematical Loan Formula
CalculatePilot uses the standard monthly payment formula for fixed-rate installment loans. The payment (M) comes from the amount financed (P), the monthly interest rate (r), and the number of payments (n).
- Simple Interest Convention: Most US auto loans charge simple interest on the remaining balance. The front-loaded "Rule of 78s" method is prohibited on US consumer loans longer than 61 months.
- Prepayment Efficiency: On a simple-interest loan with no prepayment penalty, extra payments go straight to principal and cut the interest that would have accrued on it.
GAP Protection Anatomy
Guaranteed Asset Protection (GAP) covers the shortfall between your insurance payout (the car's market value) and the unpaid loan balance if the vehicle is totaled or stolen.
- Less than 20% down payment at purchase
- Financing terms extended over 60 months
- Rolling negative trade-in equity into the new loan
- High-depreciation vehicles (some luxury and EV models)
How this calculator works
Sales tax is applied to the price minus your trade-in value, then either added to the loan or paid at signing. Dealer fees are added to the loan, and any amount still owed on your trade-in is subtracted from its value (negative equity is rolled into the new loan). The remaining balance amortizes at your interest rate over the loan term, same as any fixed-rate loan.
Amount financed = Price + Fees − Down payment − (Trade-in − Payoff) + Sales tax
The financed amount is then run through the standard loan amortization formula.
By Suhaib Hassan · Formula verified 27 Sep 2026 · How CalculatePilot verifies formulas →
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.
Manufacturer rebates and incentives
Cash rebates from manufacturers reduce what you finance, but whether they also reduce your sales tax depends entirely on your state.
- Rebate taxed on full price — most states calculate sales tax on the vehicle's price before the rebate is applied. A $2,000 rebate on a $40,000 car still means tax is charged on $40,000, not $38,000.
- Rebate not taxed — a smaller group of states (including Arizona, Iowa, Kansas, Minnesota, Missouri, Nebraska, Texas, and Wyoming) tax the post-rebate price, so the rebate lowers your tax bill too.
Trade-in credit is a separate question from rebate taxability — check your own state's rule for each before assuming this calculator's default trade-in tax treatment matches a rebate.
To model a rebate here, subtract it from the vehicle price before entering it, then adjust the sales tax rate manually if your state taxes the pre-rebate amount.
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 (no dealer fees): 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 about $4,306 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?
Yes — enter them in the Dealer Fees, Title & Documentation field (or add them to the vehicle price). They're typically rolled into the loan, so leaving them out understates the amount financed.
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.
Does a manufacturer rebate lower my sales tax too?
It depends on your state. Most states tax the vehicle's full pre-rebate price, so a rebate lowers your loan amount but not your tax bill. A handful of states (including Arizona, Iowa, Kansas, Minnesota, Missouri, Nebraska, Texas, and Wyoming) tax the post-rebate price instead — check your state's rule before assuming either way.
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