Auto Loan Calculator

How Auto Loan Calculator Works

M = P × [r(1+r)^n] / [(1+r)^n − 1] | Taxable = Price − Trade-In Value

P, r & n

Loan Terms (Principal, Rate, Months) — Principal = Price + Tax + Fees + Negative Equity − Down − Trade-In. Monthly rate r = APR ÷ 12. Term n in months (typical: 36-84). These three values determine your monthly payment through the standard amortization formula.

Negative Equity

Underwater Trade-In — When you owe more on your trade-in than it's worth, the difference is added to your new loan principal.

How to Use

1. Enter the agreed vehicle price.
2. Select your loan term and enter your APR.
3. Enter your cash down payment, trade-in value, and any remaining loan balance on the trade-in.
4. Add your local sales tax rate and any title/registration/doc fees.
5. The calculator applies sales tax only to (price − trade-in value), as most states require.

Quick Reference

Common Uses

• •Comparing loan offers from dealerships, banks, and credit unions to find the best interest rate and monthly payment
• •Budgeting for a new or used car purchase by estimating monthly payments before visiting a dealer
• •Deciding between different loan terms (36 vs 60 vs 72 months) to balance payment affordability against total interest cost
• •Evaluating the impact of down payment size, trade-in value, and sales tax on the total financed amount

Understanding the Result

Worked Examples

Frequently Asked Questions

What is negative equity on a trade-in?

If you owe $15,000 on your current car but it's only worth $12,000, you have $3,000 in negative equity. Dealers typically "roll" this into your new loan, meaning you're financing more than the new car costs. It's sometimes called being "upside down" or "underwater."

How do sales tax and title/registration fees affect my loan?

In most US states, sales tax applies only to price minus trade-in value. Title/registration fees typically run $50-$300, and dealer doc fees range $100-$500. These all get added to your loan amount. A few states (like California) don't offer the trade-in tax credit — check your DMV.

What is a good APR for a car loan?

New car rates as of 2026: Excellent credit (score 750+) typically qualifies for 6% to 8% APR. Good credit (700 to 749) qualifies for 8% to 11%. Fair credit typically sees 13% to 17%. Used car rates run 2% to 4% higher across all credit tiers. Credit unions and online lenders often beat dealership financing by 1% to 2%. Always check rates from at least 3 lenders before signing — the difference can save thousands over the life of the loan.

Is a 72-month or 84-month car loan a bad idea?

Long-term loans of 72 or 84 months have three major risks. First, you pay dramatically more in total interest — a $35,000 loan at 8% over 84 months costs about $11,000 in interest vs. $7,500 over 60 months. Second, you will be underwater (owing more than the car is worth) for most of the loan term because cars depreciate faster than long-term loans amortize. Third, you are more likely to need GAP insurance, which adds cost. If you need a 72 or 84-month loan to afford the monthly payment, the car is probably too expensive for your budget. Stick to 48 to 60 months whenever possible.

Should I get pre-approved before visiting the dealership?

Yes, absolutely. A pre-approval from your bank or credit union gives you three advantages: it sets a firm budget before you walk into the showroom, it gives you a rate benchmark to compare against dealer financing offers, and it prevents the dealer from marking up your interest rate (a practice called dealer reserve where the dealer adds 1% to 2% to your approved rate and keeps the difference). Many credit unions offer same-day pre-approvals online. Bring your pre-approval letter to the dealership and only share it after you have negotiated the out-the-door price.

What is GAP insurance and do I need it?

GAP (Guaranteed Asset Protection) insurance covers the difference between your loan balance and the car's actual cash value if it's totaled or stolen. You should strongly consider GAP if you put less than 20% down, finance for 72+ months, or roll negative equity into the loan — because you'll be underwater for most of the loan term. However, buy GAP through your auto insurer (typically $20-$40/year added to your policy) rather than from the dealer finance office where it can cost $500-$900 as a one-time fee. Some insurers and credit unions include GAP-like coverage as a standard policy feature.

Pro Tips

• →Always negotiate the out-the-door price first, not the monthly payment. Dealers can lower monthly payments by stretching the loan term, which costs you thousands more in interest.
• →Get financing pre-approved from your bank or credit union before visiting the dealership. This gives you a baseline rate to compare against dealer financing — and the dealer may beat it to earn your financing business.
• →The 20/4/10 rule of thumb for affordable car buying: put 20% down, finance for no more than 4 years (48 months), and keep total monthly vehicle expenses (payment + insurance + fuel) under 10% of gross monthly income.
• →Avoid rolling negative equity into a new loan whenever possible. If you are underwater on your current car, consider paying down the difference in cash rather than financing it at 7-10% APR over 5-7 years.
• →Be skeptical of 72-month and 84-month loans. While they lower monthly payments, you will be underwater on the car for most of the loan term and pay dramatically more in total interest — often thousands more.
• →Watch for dealer add-ons in the finance office: extended warranties, GAP insurance (often cheaper through your own insurer), VIN etching, fabric protection, and nitrogen tire fills are all high-margin items you can decline or buy elsewhere for less.

Limitations to Know

• •This calculator uses the standard amortization formula with a fixed APR, but dealer financing may involve simple interest loans that calculate interest daily rather than monthly.
• •It does not account for manufacturer incentives, rebates, or special financing offers (0% APR) that may be available on new cars. Lease buyout calculations are not supported.
• •Credit score impact on APR is not modeled — actual rates vary significantly by credit tier. Insurance costs, GAP insurance, and extended warranties are not included but can add $50-$200+ to monthly ownership costs.
• •The sales tax calculation follows the most common US method (tax on price minus trade-in); a few states including California, Hawaii, Kentucky, Maryland, and Virginia tax the full purchase price without trade-in credit.

Sources

• NHTSA
• CFPB - Auto Loans