Auto Loan Calculator
Calculate monthly car payments with down payment and trade-in value.
This auto loan calculator works out the monthly payment on a car from the price, down payment, trade-in value, rate, and term. The amount financed is the price minus both the cash down and the trade-in equity.
The monthly payment is where the negotiation usually stops, which is exactly why dealers quote it. A longer term can cut the payment by a third while adding a thousand dollars of interest and leaving you owing more than the car is worth for years. Below: the formula, a term comparison, and the numbers a dealer quote tends to hide.
How to calculate a car payment
- Amount financed = price − down payment − trade-in value. A $35,000 car with $5,000 down and no trade borrows $30,000.
- Monthly rate = 5.9% / 12 / 100 = 0.004917.
- Term in months = 60.
- Payment = 30,000 × 0.004917 × 1.3422 / 0.3422 = $578.53.
- Total interest = 578.53 × 60 − 30,000 = $4,711.
Example
A $35,000 car, $5,000 down, 5.9% for 60 months: $30,000 financed, $578.53 a month, $4,711 of interest. The same deal over 72 months is $495 a month — $83 cheaper — but costs $5,633 in interest, $922 more. Over 48 months it is $703 a month and $3,725 of interest.
Auto loan formula
M = P × r(1+r)^n / ((1+r)^n − 1), with P = price − down − trade-in. Total interest = M × n − P.
How to use this calculator
- Enter the negotiated price, not the sticker. Taxes and dealer fees are usually added later, so add them to the price if you plan to finance them.
- Put cash down and trade-in value in separate fields; only the sum reduces the amount financed.
- Set the rate the dealer quoted and the term in months — 60 is five years, 72 is six.
- Read the payment, then the total interest line. If the term is over 60 months, check the balance against the car's value at the same point.
What the payment includes
Principal and interest only. Sales tax, title and registration, dealer documentation fees, extended warranties, and gap insurance are commonly rolled into the loan — which raises the amount financed and the payment. On a $35,000 car, 7% tax alone adds $2,450 to what you borrow.
Down payment and negative equity
A 20% down payment is the old rule; 10% is common now. Putting less down means owing more than the car is worth for longer, because a new car loses roughly 20% of its value in the first year. Rolling negative equity from a previous loan into a new one makes that hole deeper.
The long-term trap
Stretching to 72 or 84 months lowers the payment but not the price. You pay interest for longer and stay underwater longer, and a car bought on an 84-month loan is usually out of warranty before the loan is half paid.
| Term | Payment | Total interest |
|---|---|---|
| 48 months | $703 | $3,725 |
| 60 months | $579 | $4,710 |
| 72 months | $495 | $5,633 |
$30,000 financed at 5.9%. Each extra year cuts the payment by about $80 and adds about $900 of interest.
What this calculator leaves out
Insurance, fuel, maintenance, and depreciation — the costs that usually exceed the payment over five years. It also ignores manufacturer subsidized rates, which can be lower than any bank offer but sometimes replace a cash rebate.
Common mistakes
- Negotiating the payment instead of the price. The dealer can hit any payment by stretching the term.
- Forgetting tax and fees. They are usually financed, so the real amount borrowed is above the sticker difference.
- Comparing a 60-month loan with a 72-month loan by payment alone. Compare total interest and the loan-to-value curve.
FAQ
How is a car payment calculated?
Amount financed × the amortizing factor r(1+r)^n / ((1+r)^n − 1). The amount financed is price minus down payment and trade-in.
How much should I put down on a car?
Ten to twenty percent is the usual range. Under 10% you risk negative equity within the first year, because new cars depreciate fastest early.
Is a 72-month car loan a bad idea?
It costs more and keeps you underwater longer. On $30,000 at 5.9%, 72 months adds about $920 of interest over 60 months and $83 less per month — a poor trade unless cash flow is tight.
Should I take the dealer's financing or a bank loan?
Compare the APR, not the payment. Dealer financing is sometimes subsidized below market; when it is not, a credit union pre-approval usually wins. Get both before you negotiate the price.
What is gap insurance?
Coverage that pays the difference between the insurance payout and the loan balance if the car is totaled. It matters most when the down payment is small and the term is long.
Does a trade-in reduce the sales tax?
In many US states, yes — tax is charged on the price net of the trade-in. That makes a trade worth slightly more than the same amount of cash in those states.
Can I pay off a car loan early?
Usually without penalty, and it saves the remaining interest. Check for a prepayment penalty in the contract; they are uncommon on consumer auto loans but not unknown.