What This Calculator Does
This tool estimates the monthly payment on a US auto loan. Enter the vehicle price, any down payment and trade-in credit, your local sales tax rate, the annual percentage rate (APR), and the loan term in months. It returns your estimated monthly payment along with the amount financed, sales tax, total interest, and the total of all payments. Note: tax handling varies by US state — this model applies sales tax to the full vehicle price.
How to Use It
Type the negotiated vehicle price, then your cash down payment and the value of any trade-in. Add the sales tax rate for your state, the APR your lender quoted, and the number of months you'll finance. The calculator folds sales tax into the loan and amortizes the balance.
The Formula Explained
The monthly payment uses the standard amortization formula $$M = P \cdot \frac{r\,(1+r)^{n}}{(1+r)^{n}-1}$$ where \(P\) is the amount financed, \(r\) is the monthly interest rate (APR ÷ 12), and \(n\) is the number of months. The amount financed is the price minus your down payment and trade-in, plus sales tax computed on the price.
Worked Example
For a $35,000 car with 7% sales tax, no down payment and no trade-in: sales tax = $2,450, so the amount financed is $37,450. At a 6.5% APR, \(r = 0.065 \div 12 = 0.00541667\) and \(n = 60\). The monthly payment works out to about $732.75. Over 60 months you pay roughly $43,965 total, of which about $6,515 is interest.
Key Terms Explained
- APR (Annual Percentage Rate)
- The yearly cost of borrowing expressed as a percentage. In this tool it is entered as apr and converted to a monthly rate.
- Principal / Amount Financed (P)
- The amount you actually borrow. Here it equals price minus down payment minus trade-in credit, plus sales tax on the price: \(P = \text{Price} - \text{Down} - \text{Trade-In} + \text{Price}\cdot\frac{\text{Tax\%}}{100}\).
- Monthly Rate (r)
- The periodic interest rate per month, found by dividing the APR by 12 (and by 100 to convert from a percentage): \(r = \frac{\text{APR\%}}{1200}\).
- Term (n)
- The number of monthly payments in the loan. A 60-month loan has \(n = 60\).
- Down Payment
- Cash paid upfront toward the vehicle, which directly reduces the amount financed.
- Trade-In Credit
- The value your old vehicle contributes toward the purchase, also reducing the amount financed. In many states it can lower the taxable amount, but this tool taxes the full price.
- Sales Tax
- A percentage of the vehicle price added to the amount financed when rolled into the loan. Actual rules vary by state and locality.
- Total Interest
- The sum of all interest paid over the life of the loan, equal to total of payments minus the amount financed: \((M \times n) - P\).
Interpreting Your Result
Monthly payment (M) is the fixed amount due each month that fully repays the loan over the chosen term. Early payments are mostly interest; later payments are mostly principal.
Amount financed (P) is what you are borrowing after subtracting your down payment and trade-in and adding sales tax. This is the figure that interest is charged on.
Total interest is the extra you pay for borrowing — the difference between everything you pay and the amount financed. Shorter terms and larger down payments shrink it; longer terms grow it even when the monthly payment looks comfortable.
Total of payments is the monthly payment multiplied by the number of months — the complete cash cost of the loan, excluding your upfront down payment.
This calculator gives an estimate. It does not include lender or documentation fees, GAP insurance, extended warranties, dealer add-ons, or registration and title costs. Real-world APR depends on your credit, the lender, and incentives, and state sales-tax rules vary — some states tax the price after a trade-in deduction rather than the full price, so your actual taxable amount may differ. Treat the output as a planning figure and confirm exact numbers with your lender and dealer.
FAQ
Is sales tax included in the loan? Yes. Many buyers finance the tax, so it is added to the amount financed here.
What if my state taxes the price after trade-in? Rules differ by state; this tool applies tax to the full price. Adjust your tax rate if your state credits trade-in value.
Does a bigger down payment lower the payment? Yes — it reduces the amount financed, which directly lowers both your monthly payment and total interest.
