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Enter the price, your down payment and trade-in — get the true amount financed after tax and fees, your monthly payment, and the interest each term length costs you.

Vehicle & loan

Sales tax and fees are usually rolled into the loan — that is why the financed amount is higher than the sticker price minus your deposit.

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Monthly payment

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Vehicle price—
Down payment—
Trade-in equity—
Sales tax—
Fees—
Amount financed—
Total interest—
Total cost of the car—
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What each term length costs

Same car, same APR — only the number of months changes. Your selected term is highlighted.

TermMonthlyTotal interestvs 36 months

Longer terms lower the payment and raise the total. They also keep you in negative equity for longer, because the car depreciates faster than the loan amortizes.

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How the amount financed is built

The number your loan is actually based on is rarely the sticker price. Start with the price, subtract what you put in, then add what the state and dealer add on:

Price − down payment − trade-in equity + sales tax + fees = amount financed.

Using the defaults above: a $32,000 car with $4,000 down and a $6,000 trade-in, 6% sales tax and $700 of fees finances $24,260 — not the $22,000 that price minus deposits alone would suggest.

The trade-in tax credit

Most US states charge sales tax on the price after your trade-in is deducted. On this example that means tax on $26,000 rather than $32,000 — a saving of $360. A handful of states tax the full price regardless, so the checkbox lets you model both. It is worth checking your own state's rule before accepting a dealer's payment quote.

Term length is the expensive decision

Stretching the loan is the standard tool for hitting a monthly budget, and it works — but the price is steep. On the same $24,260 at 7.5%:

Going from three years to seven halves the payment and more than doubles the interest. The same trade-off applies to any amortized loan.

Negative equity

A new car typically loses a large share of its value in the first year, while a long loan pays down principal slowly at the start. The gap between what the car is worth and what you owe is negative equity — being "upside down". It matters if the car is written off or you want to sell early, because you owe the difference in cash. Larger deposits and shorter terms are the only two reliable fixes.

APR is not the interest rate

APR includes lender fees, so it is the number to compare between offers. Dealer financing is often competitive on promotional rates but not always on APR once fees are included — getting a pre-approval from a bank or credit union before you walk in gives you a benchmark and turns the conversation into a price negotiation rather than a payment negotiation.

Frequently asked questions

How is a car payment calculated?
With the standard amortization formula: payment = P × i × (1+i)ⁿ ÷ [(1+i)ⁿ − 1], where P is the amount financed, i is the APR divided by 1,200, and n is the number of months. The part people get wrong is P — it includes sales tax and fees, not just the price minus the deposit.
Does a trade-in reduce my sales tax?
In most US states, yes — tax is charged on the price after the trade-in is deducted. On a $32,000 car with a $6,000 trade-in at 6% tax, that credit saves $360. A few states tax the full purchase price, so check your state's rule; the calculator lets you switch the behaviour.
Is a 72 or 84 month car loan a bad idea?
It lowers the payment and raises the cost. On $24,260 at 7.5%, an 84-month loan costs $6,997 in interest versus $4,907 over 60 months. It also keeps you in negative equity far longer, since the car depreciates faster than the balance falls. If you need the long term to afford the payment, it is usually a sign the car is too expensive.
What is negative equity on a car loan?
Owing more than the vehicle is worth. It is common early in a long loan because depreciation outpaces principal repayment. It becomes a real problem if the car is totalled or you sell early, as you must cover the shortfall in cash — gap insurance exists specifically to cover that difference.
Should I take dealer financing or a bank loan?
Get a pre-approval from a bank or credit union first, then let the dealer try to beat it. Promotional manufacturer rates can be excellent, but compare APR rather than the monthly payment, since a lower payment often just means a longer term. Arriving pre-approved also keeps the negotiation focused on the car's price.

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