Auto Loan Calculator

Sales tax = (price − trade-in) × rate; amount financed = price − down payment − trade-in + sales tax; payment = A from the standard amortisation formula

P

Vehicle price, before anything is taken off or added

D

Down payment: the cash you put in at the start

V

Trade-in value: what the dealer allows you for your old car

t

Sales tax rate as a percentage, applied to the price after the trade-in

F

Amount financed: what the loan is actually for

r

Monthly interest rate: the annual rate divided by twelve

Use it while you are still choosing the car, not after you have agreed a price: the monthly payment decides which cars you can look at, and the total cost decides whether the cheaper sticker is really cheaper once the tax and the term are in. Then use it to price the three decisions that are yours. The down payment and the trade-in both reduce the amount financed, and the trade-in does it twice over in most states, once off the price and once off the tax. The term changes the payment far more than it changes the cost — stretching a five year loan to seven cuts the monthly figure by about a sixth and adds thousands to the interest, which is what the reference chart below is for. And the sales tax rate is the field people leave at whatever it was set to: check your own state, because it is charged on the deal and paid whether or not you financed it.

1. A 35,000 car, 5,000 down, no trade-in, 6% tax, 7% over sixty months

   1. Sales tax: 35,000 × 6% = 2,100.00, since there is no trade-in to deduct
   2. Amount financed: 35,000 − 5,000 − 0 + 2,100 = 32,100 — not 30,000
   3. Monthly rate: 7 ÷ 12 = 0.583333% a month, which is 0.00583333 as a decimal
   4. Payment: 32,100 × 0.00583333 × 1.00583333^60 ÷ (1.00583333^60 − 1) = 635.62
   5. Total interest: 38,137.09 repaid − 32,100 borrowed = 6,037.09
   6. Cash cost: 5,000 down + 38,137.09 in payments = 43,137.09

   This is the page's default. The sticker says 35,000 and the cash that leaves you is 43,137.09 — the tax and the interest are both in that gap, and neither appears on the window sticker.

2. The same car with a 3,000 trade-in

   1. Sales tax: (35,000 − 3,000) × 6% = 1,920.00 — the trade-in comes off the taxable amount too
   2. Amount financed: 35,000 − 5,000 − 3,000 + 1,920 = 28,920
   3. Payment: 28,920 × 0.00583333 × 1.00583333^60 ÷ (1.00583333^60 − 1) = 572.65
   4. Total interest: 34,359.03 − 28,920 = 5,439.03
   5. Cash cost: 5,000 + 34,359.03 = 39,359.03

   A 3,000 car takes 3,180 off the loan, not 3,000, because the trade-in reduces the sales tax as well. That 180 is the trade-in tax credit, and it is the reason a dealer trade-in is often worth more than the same money in a private sale.

3. A 24,000 car at 0% interest with 5% sales tax

   1. Sales tax: 24,000 × 5% = 1,200.00
   2. Amount financed: 24,000 − 2,000 − 0 + 1,200 = 23,200
   3. Zero rate: nothing accrues, so the payment is 23,200 ÷ 36 = 644.44 and the total interest is 0
   4. Cash cost: 2,000 + 23,200 = 25,200, which is the price plus the tax and not a cent more

   Zero-rate finance is a real offer, not a corner case, and it is the clearest way to see that the interest is a separate charge from the tax: the tax is still there, the interest is not, and the cash cost lands exactly on price plus tax.

The sales tax rate is yours to enter and the page does not look it up, because the rules differ by state and sometimes by county or city within a state. Most states charge tax on the price after the trade-in is deducted — a trade-in tax credit — but some charge it on the full price, some cap how much trade-in can be deducted, and a few have no sales tax at all. Enter the rate that applies where you are registering the car and treat the result as a planning figure rather than a quote. What else is missing: registration, title and plate fees, dealer documentation fees, any dealer-installed extras, and insurance — none of them are in the cost, and the first three are often rolled into the loan in practice, which raises the amount financed without appearing here. The total cost figure does not include your trade-in, because that car is not cash you are spending on this purchase; it is an asset you are exchanging, and counting it would understate the cost by the value of a car. Finally, the arithmetic assumes the rate you enter holds for the whole term at monthly compounding, and dealer promotional rates are frequently conditional — a lower rate in exchange for a higher price, or a rebate you give up to get the rate.

How is the amount financed on a car worked out?

Price, minus the down payment, minus the trade-in value, plus the sales tax. On a 35,000 car with 5,000 down and no trade-in at 6% tax, that is 35,000 − 5,000 + 2,100 = 32,100, so the loan is 32,100 rather than the 30,000 the price and the down payment alone would suggest. Interest is charged on that financed number, which is why the tax you paid once still costs you money every month.

Is sales tax charged on the price before or after the trade-in?

After the trade-in, in most US states — the trade-in tax credit. Sell or trade a car worth 3,000 and the taxable amount drops by 3,000, saving 180 at a 6% rate. Not every state does this: some charge tax on the full price, some limit how much can be deducted, and a few have no sales tax. Check your own state's rule and enter the rate that applies to you.

Should I take the dealer's low-rate financing or the rebate?

Work out both. A promotional rate and a cash rebate are usually alternatives, not additions: taking the cut-rate loan often means giving up the rebate, and the rebate can be worth more than the interest saved, particularly on a short term. Put the rebate into the down payment on this page and compare the total cost figure against the monthly payment from the low-rate offer.

What term should I choose for a car payment?

The shortest one whose payment you can carry without strain. On 32,100 at 7%, sixty months costs 635.62 a month and 6,037.09 in interest; eighty-four months cuts the payment to 484.48 but raises the interest to 8,595.75 — 2,558.66 more for 151.14 a month less. Cars also lose value faster than long loans pay them off, which is what leaves people owing more than the car is worth.

Does this include registration, insurance and dealer fees?

No. It covers the price, the down payment, the trade-in, the sales tax and the loan itself. Registration and title fees, dealer documentation charges, warranties and insurance are separate costs, and some of them are commonly added to the loan at the dealership — if that happens, add them to the amount financed here to see what the payment really becomes.

Why is the total cost higher than the price plus the interest?

Because it is the cash that leaves you: the down payment plus every monthly payment, which together equal the loan plus the interest plus the down payment. On the default example that is 5,000 + 38,137.09 = 43,137.09 against a 35,000 price. The trade-in value is deliberately not deducted from that figure — your old car is not cash you spend on this one.

• Buying a used car from a dealer — what the price on the lot does and does not include — U.S. Federal Trade Commission (United States)
• Used cars — the dealer's obligations and the paperwork behind a car sale — U.S. Federal Trade Commission (United States)
• H.15 Selected Interest Rates — the market rates a car loan rate is priced against — Board of Governors of the Federal Reserve System (United States)