An auto loan calculator estimates your monthly car payment and total cost from the price, down payment, interest rate, and term — and, here, the full deal structure: trade-in and negative equity, sales tax, fees, the real amount financed, the cash due today, and your underwater risk.
Quick answers
A practical guide to car loans
How auto loan payments are calculated
A car loan is amortized: each monthly payment first covers the interest on the balance you still owe, and whatever is left reduces the principal. Early payments are mostly interest; later payments are mostly principal. The fixed monthly payment is set so the balance reaches exactly zero at the end of the term.
The payment depends on three things: the amount financed, the interest rate (APR), and the term. Lowering the amount financed (a bigger down payment, rebate, or trade-in) or shortening the term reduces the interest you pay; a lower APR reduces the payment without extending the term.
Why the loan term changes the total interest
Stretching a loan over more months makes each payment smaller, which is why dealers often quote 72- or 84-month terms. But you pay interest for longer and on a balance that falls more slowly, so the total interest rises — sometimes by thousands. The term comparison on this page shows the same loan over 36 to 84 months side by side.
A smaller monthly payment can feel affordable while quietly costing far more overall. Compare the total interest and total cost across terms, not just the monthly figure.
How the down payment affects payment and negative equity
A larger down payment reduces the amount financed, so both the monthly payment and the total interest fall. It also protects you from negative equity: because a new car loses value quickly in the first year or two, a small or zero down payment can leave you owing more than the car is worth for much of the loan.
Putting more down — or choosing a shorter term — keeps your loan balance closer to the car’s value and shortens the time you spend underwater.
How trade-in value and the amount owed affect the loan
Your trade-in’s net equity is its value minus the loan you still owe on it. Positive equity acts like an extra down payment and reduces the amount financed. If you owe more than the trade is worth, that is negative equity.
Rolling negative equity into the new loan adds it to the amount financed, so you start the new loan already underwater and pay interest on the old shortfall. Paying the negative equity in cash instead keeps the new loan healthier. This tool lets you see both.
Cash rebate vs low APR — how to compare
A manufacturer often offers either a cash rebate or a low promotional APR, not both. The right choice is the one with the lower total cost over your term. A rebate reduces the amount you finance immediately; a low APR reduces the interest on the full amount over time.
As a rule of thumb, a rebate tends to win on smaller or shorter loans and when the regular rate is not much higher than the promo rate, while a low APR tends to win on larger or longer loans. The rebate-vs-APR tool on this page compares the total cost of each for your numbers.
Taxes and fees: financed or paid upfront
Sales tax and fees can be paid in cash at signing or rolled into the loan. Financing them keeps your upfront cash lower but increases the amount financed and the interest you pay over the term. Paying them upfront costs more today but less overall.
How much sales tax you owe — and whether a trade-in reduces the taxable amount — depends on your state. This calculator taxes the price (less the trade-in value where the trade-in tax credit applies) and assumes a rebate does not reduce the taxable price, which is the more common US treatment; confirm the rules where you buy.
New vs used car financing
Used-car loans usually carry higher interest rates than new-car loans and shorter maximum terms, but the vehicle has already taken its steepest depreciation, so negative-equity risk can be lower for a given down payment. New cars often qualify for promotional low-APR financing and rebates, but lose value fastest in the first year.
Whichever you choose, the same math applies — compare the amount financed, APR, term, total interest, and total cost.
Dealership financing vs direct lending
You can finance through the dealer or arrange your own loan from a bank or credit union (direct lending). Getting preapproved before you shop gives you a rate to beat and separates the price negotiation from the financing. Dealers may match or beat a preapproval, but the convenience of dealer financing can come with a higher rate or added products.
Compare the APR and total cost of any dealer offer against your preapproval, and treat add-ons such as gap insurance or extended warranties as optional and negotiable.
How to avoid overpaying — and when a low payment is dangerous
Negotiate the vehicle price first, then financing, and judge offers by the total cost — the price plus tax, fees, and all the interest — not the monthly payment. A long term or rolled-in costs can shrink the payment while raising what you ultimately pay.
A low monthly payment is dangerous when it comes from a long term or financing everything: it can leave you underwater for years and paying far more in interest. Use the term comparison and the underwater estimate here to see the trade-off before you sign.
Worked examples
1. New car with a trade-in, taxes and fees financed
A $35,000 new car at 6.5% APR over 60 months, with $5,000 down, a $1,500 rebate, a $10,000 trade-in on which $4,000 is owed, 7% sales tax (trade-in credit applied) and $1,000 of fees, all financed.
- Sales tax: $1,750 (on $35,000 − $10,000)
- Amount financed: $25,250; cash due today: $5,000
- Monthly payment: about $494; total interest: about $4,393
- Total out-of-pocket: about $34,640 — less than the sticker, because the rebate and $6,000 of trade equity offset the tax, fees, and interest
- Common mistake: celebrating the low payment without noticing taxes and fees added $2,750 to the loan.
2. Used car, underwater trade-in not rolled in
A $22,000 used car at 9% APR over 72 months, $1,000 down, a $6,000 trade-in with $9,000 owed (so $3,000 negative equity), 8% tax and $1,000 fees paid in cash, no trade-in tax credit.
- Amount financed: $21,000; cash due today: $6,760 (down + tax + fees + the $3,000 negative equity)
- Monthly payment: about $379; total interest: about $6,255
- Common mistake: rolling that $3,000 negative equity into the loan to lower the cash due — it would start the new loan $3,000 underwater.
3. A 0% promotional APR
A $40,000 car at 0% APR over 36 months with $20,000 down, 6% tax and $1,050 fees financed.
- Amount financed: $23,450; total interest: $0
- Monthly payment: about $651 (simply $23,450 ÷ 36)
- Compare: if a $2,500 rebate were offered instead of 0%, the rebate-vs-APR tool shows which costs less.
Decision checklist — before you sign an auto loan
Run through these before committing. This is a checklist to help you think, not financial advice.
- The APR — and how it compares to a bank or credit-union preapproval
- The loan term, and the total interest it implies
- The total amount financed (after down payment, rebate, and trade-in)
- The total cost including sales tax and all fees
- Whether the loan has any prepayment penalty
- Which dealer add-ons are included, and whether you actually want them
- Whether you are required to carry specific insurance, and its cost
- Registration and title fees, and who pays them
- Whether a cash rebate or a low APR saves you more over the term
- Whether the monthly cost of ownership — payment plus insurance, fuel, and maintenance — fits your budget
What this calculator does not include
This calculator models a fixed-rate auto loan with monthly payments and monthly compounding. It estimates sales tax from the rate you enter, but the exact tax and the treatment of trade-ins and rebates depend on your state. The negative-equity estimate uses an assumed depreciation rate and is not a forecast of your vehicle’s value.
Not included by default: gap insurance, extended warranties or service contracts, variable-rate changes, late fees, lender-specific charges, and ongoing insurance, fuel, and maintenance unless you enter them. Results depend entirely on the values you enter and the assumptions listed.
Sources & methodology
This calculator uses standard fixed-rate amortization. Sales tax is charged on the price less the trade-in value where the trade-in tax credit applies; rebates are assumed not to reduce the taxable price. Inputs are user-entered; results are estimates, not a loan offer or tax determination. Links open in a new tab.