Auto Loan Calculator
Determine your monthly auto loan payment and total interest cost by entering the vehicle price, down payment, trade-in value, loan term, annual interest rate (APR), and your state's sales tax rate. This calculator computes how much you need to finance, applies sales tax correctly to the taxable amount, and shows your monthly payment using standard loan amortisation. In most US states, the trade-in allowance reduces the amount subject to sales tax. You also see the breakdown of your total payment: the sales tax amount, total interest over the life of the loan, and your total cost including the down payment. Auto loan rates vary by credit score, lender type, loan term, and whether the vehicle is new or used. Shopping for competitive rates from banks, credit unions, and dealer financing before accepting an offer can save you thousands in interest. Many auto loans allow early payoff without penalty, which reduces your total interest paid.
Financing $30,000 of a $35,000 car at 6.5% for 60 months: monthly payment $628.07, total interest $5,584.40.
How your auto loan payment is calculated
The monthly payment uses the standard PMT (payment) formula from financial mathematics. The amount financed is the vehicle price minus your down payment and trade-in, plus the sales tax on the taxable amount.
taxable amount = vehicle price - trade-in value
sales tax = taxable amount x sales tax rate / 100
loan amount = vehicle price - down payment - trade-in + sales tax
r = APR / 100 / 12
n = term months
monthly payment = loan x r x (1 + r)^n / ((1 + r)^n - 1)
total paid = (monthly payment x n) + down payment
total interest = (monthly payment x n) - loan amount
The trade-in deduction from the taxable amount reflects the most common US state rule, where the trade-in allowance offsets the purchase price before tax is calculated. Rules vary by state; check your state's DMV or revenue department for the exact method.
Worked example with default values
$35,000 vehicle, $5,000 down, $0 trade-in, 6.5% APR, 60-month term, 6% sales tax:
- Taxable amount = $35,000 - $0 = $35,000
- Sales tax = $35,000 x 6% = $2,100
- Loan amount = $35,000 - $5,000 - $0 + $2,100 = $32,100
- r = 6.5 / 100 / 12 = 0.005417
- n = 60
- Monthly payment = 32,100 x 0.005417 x (1.005417)^60 / ((1.005417)^60 - 1) = approximately $627.97
- Total interest = (627.97 x 60) - 32,100 = approximately $5,578
New vs. used vehicle financing
Auto loan rates and terms typically differ between new and used vehicles. New vehicles often qualify for lower rates, including promotional 0% APR offers from manufacturers, because they carry less default risk for lenders. Used vehicle loans generally carry higher rates, reflecting the greater uncertainty around vehicle value and condition.
Your credit score is the most important factor in the rate you are offered. Borrowers with excellent credit (typically 720 or above) receive materially better rates than those with fair or poor credit. The CFPB provides guidance on how credit scores affect loan pricing at consumerfinance.gov.
Loan term also affects the total cost. A 72-month or 84-month term lowers the monthly payment but substantially increases total interest paid and can result in negative equity (owing more than the vehicle is worth) for longer periods. A shorter term costs more each month but reduces total interest.
Negotiate the total cost, not the monthly payment
The number most buyers watch on the lot is the monthly payment, and that is exactly the figure a finance manager can bend without touching the price. Stretching a loan from 60 to 84 months can cut the payment by more than $100 a month while adding well over $1,000 in interest and keeping you underwater (owing more than the car is worth) for years. The disciplined approach is to fix the term first, then compare the total interest this calculator reports rather than the monthly figure in isolation.
Two inputs quietly decide the result. Enter the APR, not the advertised note rate: the APR folds in lender fees, so it reflects the true cost of borrowing. And treat the 6% sales tax field as a placeholder, because the rule is not uniform. Most states let a trade-in reduce the taxable price, but a handful (California among them) tax the full sticker, and combined state-plus-local rates run from zero to more than 10%. Look up your own rate before you trust the tax line.
One last trap: this tool does not add documentation, title, and registration fees, and dealers routinely roll those, plus any negative equity from an old loan, into the new balance. Every dollar financed accrues interest for the full term. Paying the sales tax or those fees in cash at signing shrinks the amount financed and the interest it generates, so the total-paid figure below, not the monthly payment, is the number that should drive the decision.
Auto loan calculator: frequently asked questions
What APR should I expect on an auto loan?
Rates vary by credit score, lender, loan term, and whether the vehicle is new or used. The CFPB publishes guidance on auto loan rates at consumerfinance.gov. Compare rates from banks, credit unions, and dealer financing before accepting any offer.
Does a trade-in reduce sales tax?
In most US states, the trade-in value offsets the taxable purchase price, reducing the sales tax owed. However, rules vary by state. Check your state's DMV or revenue department website for the rule that applies to you.
Is dealer financing or bank financing better?
Dealer financing may offer promotional rates (especially 0% on new vehicles) but can involve higher vehicle prices. Bank or credit union financing gives independent approval before shopping, which strengthens your negotiating position. The CFPB discusses auto loan comparison at consumerfinance.gov.
Can I pay off my auto loan early?
Check your loan agreement for prepayment penalties. Most auto loans allow early payoff without penalty, which reduces total interest paid. Contact your lender to confirm before making extra payments.
Official sources
- Auto loan guidance and consumer tools: CFPB, Auto Loans.
- Dealer vs. bank financing: CFPB, What is dealer financing?
Reviewed by the CalculatorHub team, edited by James Graham, 12 June 2026. See our methodology. General information, not financial advice.