2026-08-02 10 min

Auto Loan Calculator

Estimate monthly car payments, total loan cost, sales tax, and fees for a vehicle purchase. Includes reverse payment mode, extra payment comparison, and a full amortization schedule with CSV export.

Calculator

Vehicle Price Help

Negotiated purchase price of the vehicle

Loan Term (months)

Interest Rate(%) Help

Annual percentage rate (APR)

Cash Incentives Help

Rebates and manufacturer incentives

Down Payment Help

Cash paid upfront toward the vehicle

Down Payment Option

Trade-in Value Help

Dealer offer for your current vehicle

Amount Owed on Trade-in Help

Remaining loan balance on the traded vehicle

State

Sets default sales tax and trade-in rules

Sales Tax(%) Help

State and local sales tax rate

Title, Registration & Fees Help

Document, title, and registration fees

Extra Monthly Payment Help

Extra principal payment each month

Include taxes and fees in loan

Results update live as you type

Full monthly amortization schedule with annual rollups.

Amortization schedule

Balance Interest Payment

View:

Month	Interest	Principal	Ending Balance
1	$162.50	$424.48	$29,575.52
2	$160.20	$426.78	$29,148.73
3	$157.89	$429.10	$28,719.64
4	$155.56	$431.42	$28,288.22
5	$153.23	$433.76	$27,854.46
6	$150.88	$436.11	$27,418.35
7	$148.52	$438.47	$26,979.89
8	$146.14	$440.84	$26,539.04
9	$143.75	$443.23	$26,095.81
10	$141.35	$445.63	$25,650.18
11	$138.94	$448.05	$25,202.13
12	$136.51	$450.47	$24,751.66
End of year 1
13	$134.07	$452.91	$24,298.75
14	$131.62	$455.37	$23,843.38
15	$129.15	$457.83	$23,385.55
16	$126.67	$460.31	$22,925.24
17	$124.18	$462.81	$22,462.43
18	$121.67	$465.31	$21,997.12
19	$119.15	$467.83	$21,529.28
20	$116.62	$470.37	$21,058.92
21	$114.07	$472.92	$20,586.00
22	$111.51	$475.48	$20,110.52
23	$108.93	$478.05	$19,632.47
24	$106.34	$480.64	$19,151.83
End of year 2
25	$103.74	$483.25	$18,668.58
26	$101.12	$485.86	$18,182.72
27	$98.49	$488.49	$17,694.23
28	$95.84	$491.14	$17,203.08
29	$93.18	$493.80	$16,709.28
30	$90.51	$496.48	$16,212.81
31	$87.82	$499.17	$15,713.64
32	$85.12	$501.87	$15,211.77
33	$82.40	$504.59	$14,707.19
34	$79.66	$507.32	$14,199.87
35	$76.92	$510.07	$13,689.80
36	$74.15	$512.83	$13,176.97
End of year 3
37	$71.38	$515.61	$12,661.36
38	$68.58	$518.40	$12,142.95
39	$65.77	$521.21	$11,621.74
40	$62.95	$524.03	$11,097.71
41	$60.11	$526.87	$10,570.84
42	$57.26	$529.73	$10,041.11
43	$54.39	$532.60	$9,508.52
44	$51.50	$535.48	$8,973.04
45	$48.60	$538.38	$8,434.66
46	$45.69	$541.30	$7,893.36
47	$42.76	$544.23	$7,349.13
48	$39.81	$547.18	$6,801.96
End of year 4
49	$36.84	$550.14	$6,251.82
50	$33.86	$553.12	$5,698.70
51	$30.87	$556.12	$5,142.58
52	$27.86	$559.13	$4,583.45
53	$24.83	$562.16	$4,021.29
54	$21.78	$565.20	$3,456.09
55	$18.72	$568.26	$2,887.83
56	$15.64	$571.34	$2,316.48
57	$12.55	$574.44	$1,742.05
58	$9.44	$577.55	$1,164.50
59	$6.31	$580.68	$583.82
60	$3.16	$583.82	$0.00

Results

Normal

Monthly Payment

$586.98

Principal and interest payment based on the amount financed

Vehicle Price

$40000.00

Negotiated purchase price

Amount Financed

$30000.00

Price minus incentives, down payment, and trade-in, plus financed taxes and fees

Sales Tax

$2900.00

State sales tax on the taxable base (trade-in reduces it in most states)

Upfront Payment

$13100.00

Down payment plus taxes and fees paid at signing

Total of 60 Payments

$35219.07

Sum of all scheduled monthly payments

Total Loan Interest

$5219.07

Total interest paid over the life of the loan

Total Cost of Vehicle

$48319.07

Price plus interest, sales tax, and fees

Estimates assume a fixed-rate simple-interest loan with on-time payments. Your actual rate depends on credit, lender, and market conditions.

Visualizations

Principal vs. Interest

Principal85%

Interest15%

Loan Balance Over Time

Interest Rate (APR)

6.5%

015

Amount Financed vs. Price

Financed30,000$

Formula

The monthly payment M is computed with the standard amortization formula where P is the amount financed, r is the monthly interest rate (APR ÷ 12 ÷ 100), and n is the number of monthly payments.

M = P × r(1+r)ⁿ / ((1+r)ⁿ − 1)

Alternative Form

P = M × (1 − (1+r)⁻ⁿ) / r (reverse mode)

Variables

Symbol	Name	Unit	Description
M	Monthly Payment	$	Fixed principal + interest payment each month
P	Amount Financed	$	Price − incentives − down payment − trade-in + negative equity + financed taxes/fees
r	Monthly Interest Rate		Annual rate ÷ 12 ÷ 100
n	Number of Payments	months	Loan term in months
Tax	Sales Tax	$	Rate × (price − trade-in reduction, where state allows)

Explanation

Auto loans are amortized: each payment covers the interest accrued on the remaining balance plus a portion of principal. The amount financed starts with the negotiated price, subtracts cash incentives, down payment, and trade-in value, adds any negative equity (amount owed exceeding trade-in value), and optionally adds sales tax and fees.

Derivation

The formula comes from the present value of an annuity: P = M × (1 − (1+r)⁻ⁿ) / r. Rearranging for M gives M = P × r(1+r)ⁿ / ((1+r)ⁿ − 1). When the rate is 0%, M = P / n. The reverse mode solves the same equation for P given a target payment.

Step-by-Step Calculation

Follow each step to understand how the result is calculated from your inputs.

Step 1

Compute the sales tax on the taxable base. Most states tax the price minus the trade-in value; a few states (CA, DC, HI, KY, MD, MI, MT, VA) tax the full price.

Tax = rate × (price − trade-in reduction)

Price:$40000.00

Rate:7.25%

Trade-in:$0.00

Intermediate: Tax = 7.25% × $40000.00

Result: Sales Tax = $2900.00

Step 2

Calculate the amount financed: price minus incentives, down payment, and trade-in, plus negative equity and any financed taxes and fees.

P = price − incentives − down − trade + owed + financed(tax + fees)

Incentives:$0.00

Down:$10000.00

Trade:$0.00

Owed:$0.00

Intermediate: P = $40000.00 − $0.00 − $10000.00 − $0.00 + $0.00

Result: Amount Financed = $30000.00

Step 3

Convert the annual percentage rate into a monthly rate.

r = APR ÷ 12 ÷ 100

APR:6.50%

Intermediate: r = 6.50 / 12 / 100

Result: r = 0.005417

Step 4

Apply the amortization formula to compute the monthly payment.

M = P × r(1+r)ⁿ / ((1+r)ⁿ − 1)

P:$30000.00

n:60 months

Intermediate: M = $30000.00 × 0.005417 × (1+0.005417)^60 / ((1+0.005417)^60 − 1)

Result: Monthly Payment = $586.98

Step 5

Multiply the payment by the number of payments to get the total repaid, then subtract principal to find total interest.

Total = M × n, Interest = Total − P

M:$586.98

n:60

Intermediate: Total = $586.98 × 60

Result: Total = $35219.07, Interest = $5219.07

Step 6

Add the price, total interest, sales tax, and fees to get the true cost of the vehicle.

Total Cost = price + interest + tax + fees

Interest:$5219.07

Tax:$2900.00

Fees:$200.00

Intermediate: Total Cost = $40000.00 + $5219.07 + $2900.00 + $200.00

Result: Total Cost = $48319.07

Final Answer

$586.98

Worked Examples

See how the calculator works with different scenarios.

Scenario

You buy a $30,000 car with 10% down ($3,000) and finance the rest for 60 months at 5.5% APR. No taxes or fees considered.

Inputs

Vehicle Price:$30,000

Down Payment:$3,000 (10%)

Term:60 months

APR:5.5%

Calculation

P = 30,000 − 3,000 = $27,000 r = 0.055/12 = 0.004583 M = 27,000 × 0.004583 × (1.004583)^60 / ((1.004583)^60 − 1) M ≈ $515.67

Result

Monthly payment ≈ $515.67. Total interest ≈ $3,940. Total cost ≈ $33,940.

Interpretation

With 10% down and a 60-month term the payment lands near $516. Keeping the term at 5 years or less avoids being underwater when the car depreciates fastest.

Understanding Your Result

Your Result: Monthly Payment: $586.98

Typical range: As of mid-2026, average new-car loan rates are roughly 6.5%–7.5% APR (excellent credit 4%–6%), used-car loans 8.5%–11%. Average new-car payments are about $735/month; used cars average $530/month. Common terms: 60–72 months.

What This Means

The monthly payment is the fixed amount you pay every month, and the total cost of the vehicle includes the price plus all interest, sales tax, and fees. The total cost — not the monthly payment — is the number that matters for your budget.

Why It Matters

Auto loans are often the largest consumer debt after mortgages. A 1% higher APR on a $30,000, 60-month loan adds about $800 in interest. A 72-month term can cost over $1,000 more in interest than a 60-month term while keeping you underwater longer.

Professional Interpretation

Lenders underwrite based on credit score, debt-to-income ratio, and loan-to-value. A score of 750+ typically earns the lowest advertised rates, while subprime borrowers pay 12%+. The 20/4/10 rule (20% down, 4-year term, ≤10% of income on car costs) remains the standard guardrail for affordable payments.

Trade-in & sales tax

Most states tax only the difference between the new price and the trade-in value, effectively discounting your trade-in by the tax rate. CA, DC, HI, KY, MD, MI, MT, and VA do not allow this reduction — the calculator applies each state's rule automatically.

Negative equity

When you owe more on your trade-in than it is worth, the shortfall (negative equity) is added to the new loan, pushing the loan-to-value above 100% and usually raising your rate.

Recommendations

•Get pre-approved with a bank or credit union before visiting the dealership
•Keep the term at 60 months or less to minimize interest and negative equity
•Put at least 20% down on a new car and 10% on a used car
•Compare total cost, not just the monthly payment, across offers
•Apply any extra monthly payment toward principal to shorten the term
•Pay taxes and fees upfront if you can, to reduce the amount financed

Educational Content

Introduction

An auto loan is a secured installment loan in which the vehicle serves as collateral. Most U.S. auto loans run 36 to 84 months and are amortized — each fixed payment covers the month's interest plus a growing share of principal.

Concept Explanation

The amount financed equals the negotiated price minus cash incentives, down payment, and trade-in value, plus any negative equity and optionally taxes and fees. The monthly payment is computed with the standard amortization formula. Over time the balance declines slowly at first, then accelerates as more of each payment goes to principal.

Applications

▸New and used vehicle purchases

▸Comparing dealership financing vs. direct lending

▸Evaluating cash rebates against low-APR promotions

▸Planning trade-in and down-payment strategy

▸Refinancing decisions for existing auto loans

▸Budgeting total cost of ownership

▸Negotiating with dealers using reverse payment mode

▸Assessing extra-payment payoff strategies

Benefits

•Fixed, predictable monthly payments
•You own the vehicle once the loan is repaid
•Builds credit history with on-time payments
•Flexible terms from 24 to 84 months
•Extra payments can save thousands in interest

Limitations

•Vehicles depreciate faster than loans amortize in early years
•Interest cost can exceed 20% of the loan amount on long terms
•Being underwater complicates selling or trading the car
•Repossession risk if payments are missed
•Lenders require full-coverage insurance for the loan term

Best Practices

•Compare APRs, not just monthly payments
•Read the contract for prepayment penalties and add-on products
•Verify the financed amount matches the negotiated price
•Keep the loan term within the warranty period for new cars
•Make extra payments early when the interest savings are largest

Common Misconceptions

Myth: A lower monthly payment always means a better deal.

Truth: Dealers can hit any payment target by stretching the term. Compare total cost and APR instead.

Myth: 0% APR means the loan is free.

Truth: The price may be inflated to offset the promotion, and taxes and fees still apply. Compare the out-the-door price.

Myth: Leasing is cheaper, so leasing is better.

Truth: Lease payments are lower because you only finance depreciation — you never own the car. Over time, owning is usually cheaper.

Myth: Paying off early always saves interest.

Truth: Only with simple-interest loans. Precomputed-interest loans charge interest upfront regardless of payoff timing.

Practical Tips

•Shop rates with at least three lenders — a 1% APR difference saves roughly $800 on a $30,000 loan
•Use the Monthly Payment (reverse) tab to set a firm walk-away number before negotiating
•Time your purchase at month-end or quarter-end when dealers chase quotas
•Round your payment up to the nearest $50 and apply the difference as extra principal
•Check whether your state reduces sales tax for trade-ins and structure the deal accordingly
•Avoid financing add-ons like extended warranties — buy them separately if at all
•If your credit is below 620, wait 6–12 months to improve your score before buying

Common Mistakes

Shopping by monthly payment instead of total cost

Negotiate the out-the-door price and APR first. A low payment on an 84-month term can cost more than a higher payment on a 48-month term.

Rolling negative equity into a new loan

Pay down the old loan or sell privately. Rolling debt forward compounds the problem and keeps you underwater.

Financing taxes, fees, and add-ons on a long term

Pay taxes and fees upfront when possible, and never add accessories to the loan — they are worth less than the interest you pay on them.

Ignoring the trade-in sales tax credit

In most states your trade-in reduces the taxable base. Keep the trade-in in the same transaction to claim the credit.

Skipping pre-approval

Without a baseline rate from a bank, you cannot tell if the dealer is marking up your rate. Get pre-approved first.

Assumptions

This calculator makes the following assumptions to provide estimates:

Fixed interest rate: The payment formula assumes a fixed APR for the entire term. Variable-rate auto loans are rare but would change the payment over time.

Simple interest: Interest accrues monthly on the remaining balance. Precomputed-interest loans violate this assumption and cost more on early payoff.

On-time payments: The schedule assumes every payment is made in full on time. Late fees and penalties are not modeled.

State tax rules: State tax rates are approximate averages. Local taxes, rebate taxation, and fees vary and can change the exact amount.

Limitations

Be aware of these limitations when using this calculator:

No credit-score modeling: The calculator uses the rate you enter. Your actual rate depends on credit score, income, and lender underwriting.

Depreciation not projected: The loan math does not forecast the car's future value. A fast-depreciating model on a long term can leave you underwater.

Rebate taxation simplified: Some states tax the full price before rebates are applied. The calculator subtracts incentives from the price first.

Fees vary by dealer: Document, destination, advertising, and prep fees vary widely by dealer and state.

Frequently Asked Questions

Answers to common questions about this calculator.

What is the difference between APR and the interest rate?

The interest rate is the annual cost of borrowing the principal. APR includes the rate plus lender fees and other finance charges, giving a fuller picture of the loan's true cost. Always compare APRs when shopping lenders.

How does my credit score affect my auto loan rate?

Credit score is the biggest driver of APR. Excellent credit (750+) typically earns 4%–6%, good credit 6.5%–8.5%, fair 9%–13%, and subprime (below 620) 12%+. Check your score before applying.

Should I choose a 36, 48, 60, or 72-month term?

Shorter terms mean higher payments but far less interest and faster equity. A 60-month term is the most common balance; 72–84 months lower the payment but add thousands in interest and risk negative equity.

How much should I put down on a car?

Aim for at least 20% on a new car and 10% on a used car. A larger down payment reduces the amount financed, lowers the payment, and protects you from being underwater as the car depreciates.

How does a trade-in affect my auto loan?

The trade-in value reduces the amount financed dollar-for-dollar. In most states it also reduces the sales tax base. If you owe more than the trade-in is worth, the shortfall becomes negative equity added to the loan.

What is negative equity and how is it handled?

Negative equity occurs when you owe more on your trade-in than it is worth. The shortfall is added to the new loan, pushing loan-to-value above 100% and usually raising your rate. Pay it down first if you can.

Can I refinance my auto loan?

Yes, if rates have fallen or your credit has improved. Refinancing can lower the payment or shorten the term. Watch for origination fees and avoid stretching the term, which raises total interest.

What is a balloon payment auto loan?

A balloon loan has small monthly payments with a large final payment due at maturity. They are risky because most borrowers must refinance or sell — often at a loss — to cover the balloon. Standard amortized loans are safer.

Should I include taxes and fees in the loan?

Financing taxes and fees lowers your upfront cash but increases the amount financed and total interest. Pay them upfront if you can afford it; finance them only when cash is tight.

How is sales tax calculated on a car purchase?

Sales tax is the tax rate multiplied by the taxable base. Most states allow subtracting the trade-in value before tax. CA, DC, HI, KY, MD, MI, MT, and VA do not — the calculator applies the rule for your state.

Does my trade-in reduce the sales tax I pay?

In most states, yes — sales tax is charged on (price − trade-in). In CA, DC, HI, KY, MD, MI, MT, and VA it does not. Structuring the trade-in in the same transaction preserves the credit where allowed.

What is a good credit score for the best auto rates?

Lenders reserve their lowest rates for FICO scores of 750 and above. Scores 720–749 get slightly higher rates, and borrowers below 650 often face subprime pricing or need a cosigner.

What is the 20/4/10 rule?

A classic affordability guideline: put down at least 20%, finance for no more than 4 years (48 months), and keep total monthly car expenses (payment, insurance, fuel, maintenance) under 10% of gross monthly income.

How do extra monthly payments help?

Every extra dollar goes straight to principal, skipping the interest it would have accrued. On a $30,000, 60-month loan at 6.5%, an extra $100/month pays off about 8 months early and saves roughly $800–$900 in interest.

Are there prepayment penalties on auto loans?

Most simple-interest auto loans allow prepayment without penalty, but some subprime contracts include them. Read the contract, and if a penalty exists, weigh the interest savings against the fee.

What is the difference between simple interest and precomputed interest?

Simple interest accrues on the declining balance, so early payoff saves interest. Precomputed interest charges the full interest upfront, so paying early does not reduce the cost. Always prefer simple interest.

What is GAP insurance and do I need it?

GAP insurance pays the difference between the insurance payout and your loan balance if the car is totaled or stolen. It is valuable when you have negative equity or a small down payment.

What happens if my car is totaled while I still owe money?

Your insurer pays the actual cash value. If that is less than the loan balance, you owe the difference unless you have GAP insurance. This is how owners end up owing on a car they no longer have.

What happens if I stop making payments?

The lender may charge late fees, report to credit bureaus, and eventually repossess the vehicle. Repossession stays on your credit report for 7 years, and you may still owe the remaining balance after the sale.

Should I get pre-approved for an auto loan?

Yes. Pre-approval from a bank or credit union gives you a firm rate and amount, turning the dealership into a competitor for your business instead of the only option.

What is the difference between dealership financing and direct lending?

Dealership financing is arranged through the dealer, often with a captive lender like Toyota Financial. Direct lending means you get the loan from a bank or credit union first. Direct lending usually wins on rate transparency.

Is 0% APR financing really free?

Only if the out-the-door price is the same as a cash purchase. Manufacturers often raise prices or drop rebates on 0% offers, so compare the total cost against a rebate + regular-rate deal.

What is a cash rebate vs. a low-APR promotion?

A cash rebate reduces the price immediately; a low APR reduces interest over the term. As a rule, take the rebate on short terms and the low APR on long terms. Model both scenarios in the calculator.

How does my loan term interact with depreciation?

New cars lose about 20% of value in year one and roughly 60% over five years. If your term outpaces the depreciation curve, you owe more than the car is worth — limiting your options to sell or trade.

What is an amortization schedule?

A table showing every payment split into interest and principal, plus the remaining balance after each month. The full schedule for your loan appears below the calculator and can be exported as CSV.

Why does my balance drop so slowly at first?

Interest is charged on the full remaining balance early on, so the first payments are mostly interest. As the balance falls, more of each payment goes to principal — the decline accelerates over time.

Do I need full-coverage insurance on a financed car?

Yes. Lenders require collision and comprehensive coverage because the vehicle is collateral. Factor insurance into the total monthly cost; it can add $100–$200/month.

Can I get an auto loan with no credit history?

Yes, but expect a higher rate or the need for a cosigner. Some lenders use alternative data like income and rental history. A larger down payment reduces lender risk and improves terms.

How do used car loans compare to new car loans?

Used car loans typically carry 1–3 percentage points higher APRs and shorter maximum terms because the collateral is older and depreciates faster. Rates also rise for older vehicles.

What is the average new car payment in 2026?

The average new vehicle transaction price is around $49,000–$50,000, with average new-car payments near $735/month. Used vehicles average about $27,000 with payments near $530/month.

What is loan-to-value (LTV) and why does it matter?

LTV is the amount financed divided by the vehicle's value. Above 100% means negative equity. Lenders prefer LTV under 110%; higher ratios raise rates or require larger down payments.

How do I get the best auto loan rate?

Improve your credit score, increase your down payment, shorten the term, shop at credit unions, get pre-approved, and negotiate the price before discussing financing. Compare at least three offers by APR.

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Related Guides

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Budgeting Basics

Build a budget that includes a realistic car payment

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Strategies for paying down auto and consumer debt faster

Investing 101

Compare financing a car against investing the same monthly amount

Insurance Guide

Understand full-coverage insurance requirements for financed vehicles

Glossary

Technical terms used in mortgage calculations explained in plain language.

APR: Annual Percentage Rate — the interest rate plus lender fees expressed as an annual cost. Used to compare loans across lenders.
Amortization: Paying down a loan through scheduled payments of interest and principal so the balance reaches zero at the end of the term.
Amount Financed: The principal borrowed: price minus incentives, down payment, and trade-in, plus negative equity and any financed taxes and fees.
Down Payment: Upfront cash paid toward the purchase, reducing the amount financed and the monthly payment.
GAP Insurance: Coverage that pays the difference between the insurance payout and the loan balance if the car is totaled or stolen.
Interest Rate: The annual cost of borrowing expressed as a percentage of the principal.
Loan-to-Value (LTV): Amount financed divided by vehicle value. Above 100% means negative equity.
Negative Equity: Owing more on a vehicle than it is worth; the shortfall is often rolled into the next loan.
Preapproval: A lender's conditional commitment to finance up to a set amount at a set rate before you shop.
Principal: The outstanding loan balance before interest. Extra payments reduce principal and future interest.
Simple Interest: Interest calculated on the remaining balance each month, so early payoff reduces total interest.
Trade-in Value: The amount a dealer credits you for your current vehicle toward the purchase.

Authoritative References

Trusted sources and standards referenced by this calculator.

CFPB — Auto Loans Federal Reserve — Consumer Information FTC — Auto Financing and Leasing IRS — Standard Mileage Rates Kelley Blue Book — Car Values & Pricing Edmunds — Car Buying & Fees NADA — Vehicle Valuation NHTSA — Vehicle Safety

Applicable Standards

Truth in Lending Act (TILA)Regulation ZEqual Credit Opportunity Act (ECOA)Fair Credit Reporting Act (FCRA)

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Last Updated:

2026-08-02

Version:

2.0.0

References:

License:

Free to use for educational and professional purposes.