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AllCalcHub

Car Loan Calculator

Work out the monthly payment on a car loan, including sales tax, fees, your down payment and trade-in, and see the full cost of the car.

About the Car Loan Calculator

A car loan is repaid in equal monthly payments, usually over 3 to 7 years. The amount you finance is the price plus tax and fees, minus your down payment and trade-in. If you still owe money on your old car, that balance is usually added to the new loan.

Longer terms make the monthly payment smaller but cost more interest, and you may owe more than the car is worth for longer because cars lose value quickly.

The formula

Payment = P × i ÷ (1 − (1 + i)⁻ⁿ)

P
amount financed (price + tax + fees + amount owed − down payment − trade-in)
i
monthly interest rate (yearly rate ÷ 12 ÷ 100)
n
number of months

In most US states sales tax is charged on the price after subtracting your trade-in. A few states tax the full price.

How to read your result

  • Monthly payment is what you owe the lender each month.
  • Total cost of the car adds interest, tax and fees to the price, so you can compare a cheaper car with a longer loan against a pricier car paid off faster.
  • The yearly chart shows how quickly you build equity.

Worked example

$35,000 car, $5,000 down, $8,000 trade-in, 7% tax, 6.5% for 60 months

  1. Sales tax = ($35,000 − $8,000) × 7% = $1,890.00
  2. Financed = $35,000 + $1,890.00 + $600 − $5,000 − $8,000 = $24,490.00
  3. Monthly payment = $479.17
  4. Total interest = $4,260.50

Things to keep in mind

  • Tax rules for trade-ins and fees differ by state and country. Check your local rules.
  • Dealer add-ons such as warranties or gap insurance are not included unless you add them to fees.
  • Assumes a fixed rate with no early-payment penalty.

Questions people ask

How long should a car loan be?

Shorter is cheaper. Many advisers suggest no more than 60 months, and a down payment of at least 10–20% so you don't owe more than the car is worth.

Is it better to take a rebate or a low interest rate?

Work out both: take the rebate off the price and use your bank's rate, then compare with the dealer's low rate on the full price. The one with the lower total cost wins.

Does my trade-in reduce sales tax?

In most US states, yes: you pay tax only on the difference between the new car's price and your trade-in value.

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