Auto Loan Calculator

The sticker price is not what a car costs. Between sales tax, interest and the equity in your trade-in, the real figure is a calculation — and this tool runs it in full: your monthly payment, the amount you actually finance, the tax, the total interest over the loan, and the true total cost of the vehicle.

How It Works

1. Sales tax. The tax is calculated on the vehicle price minus your trade-in value at your sales tax rate — the treatment in most US states, where a trade-in earns a tax credit. (A few states tax the full price instead — see the limitations.)
2. Amount financed. Vehicle price plus sales tax, minus your cash down payment, minus your trade-in value. If the down payment and trade-in together meet or exceed the price plus tax, there is nothing left to finance and the tool asks you to adjust the inputs.
3. Payment. The amount financed is amortized over the term at your interest rate with the standard loan formula.
4. Totals. Total interest is the payments summed minus the amount financed; total cost is vehicle price plus sales tax plus total interest — what the car really costs you, all-in.

The Formulas

$\text{Amount Financed} = \text{Price} + \bigl((\text{Price} - \text{Trade-In}) \times \text{Tax Rate}\bigr) - \text{Down Payment} - \text{Trade-In}$

$PMT = P \times \frac{r(1 + r)^{n}}{(1 + r)^{n} - 1}$

Input Parameters

| Parameter | Unit | Description | |---|---|---| | Vehicle Price | Currency | Negotiated purchase price before tax and fees. | | Down Payment | Currency | Cash paid upfront. | | Trade-In Value | Currency | Net equity in your current vehicle (value minus anything you still owe on it). | | Interest Rate | % per year | The loan APR; must be above zero. | | Loan Term | Months | Typically 36 to 84 months; must be a whole number. | | Sales Tax Rate | % | Your state/local vehicle sales tax rate. |

Worked Example

You buy a $35,000 car, trade in your old vehicle for$8,000, put $2,000 down, pay 6% sales tax, and finance over 60 months at 5.5%.

• Sales tax: ($35,000 −$8,000) × 6% = $1,620 (charged on the price after the trade-in credit).
• Amount financed: $35,000 +$1,620 − $2,000 −$8,000 = $26,620.
• Monthly payment: **$508.47**. Total of payments:$30,508.38.
• Total interest: $3,888.38.
• Total cost of the car: $35,000 +$1,620 + $3,888.38 =$40,508.38.

The trade-in did triple duty: it cut the amount financed by $8,000, it cut the sales tax by$480 (the $8,000 of value is no longer taxed), and compared with making the same purchase with no trade-in at all, it saves a further$1,238.67 in interest over the five years.

Interpreting the Results

• Total interest is where term length shows up. Stretching the same loan from 60 to 84 months cuts the payment but adds years of interest and keeps you owing more than the car is worth for longer.
• Total cost is the number to compare across offers — a cheaper car at a higher rate can cost more than a pricier car at a promotional rate.
• A trade-in is worth slightly more than the same cash down payment. Both reduce the amount financed dollar for dollar, but the trade-in also shrinks the taxable amount — in the example, $8,000 of trade-in saves an extra$480 of tax that $8,000 of cash down would not.

The 20/4/10 Guideline

A common affordability yardstick: put at least 20% down, finance for no more than 4 years, and keep total vehicle costs (payment plus insurance) under 10% of gross income. The example above clears the 20% mark once the trade-in is counted, but breaks the four-year term rule with its five-year loan — which is typical of real purchases, and exactly why checking the total interest matters before signing.

Limitations

• Tax treatment. This tool taxes the price minus trade-in value, as most states do. A few states (California is the best-known) give no trade-in credit and tax the full price — there, the tax on the example would be $2,100 instead of$1,620, and the amount financed $480 higher. Check your state's rule before relying on the figure.
• No dealer fees. Documentation, title, registration and add-on charges are not included unless you fold them into the vehicle price.
• Negative equity needs manual handling. If you owe more on your trade-in than it is worth, the tool cannot accept a negative trade-in — add the shortfall to the vehicle price to approximate the rolled-over amount, as dealers do.

Frequently Asked Questions

Do I pay sales tax on the full price, or only on the difference after my trade-in?

In most US states, only on the difference — your trade-in value is credited against the taxable price, and that is how this calculator works. A minority of states, including California, tax the full purchase price with no trade-in credit, so buyers there will owe more tax than this tool shows for the same deal.

Is a 0% APR offer or a cash rebate better?

Run both here. Take the rebate as a lower vehicle price with a standard rate in one run, and the full price at 0% in another — but note this tool requires a rate above zero, so use 0.01% to approximate a 0% offer. Compare the total cost lines.

Can I pay the loan off early?

Most auto loans allow it without penalty, and every extra dollar of principal paid early removes interest that would have accrued on it for the remaining term. This calculator models the standard schedule; the interest shown is the maximum you would pay if you never pay extra.