Car Loan Calculator

Your monthly payment is calculated using the standard amortization formula: M = L × [r(1+r)ⁿ] / [(1+r)ⁿ − 1], where L is the loan amount (vehicle price + tax − down payment − trade-in), r is the monthly interest rate (APR ÷ 12), and n is the total number of monthly payments. Each payment covers that month's interest charge plus a portion of the remaining principal.

A good APR depends on your credit score, loan term, and whether the vehicle is new or used. As a general guide: borrowers with excellent credit (750+) can qualify for rates as low as 4–6% on new vehicles; good credit (700–749) typically sees 6–8%; fair credit (650–699) may see 10–15%; and subprime borrowers may face rates of 15–25% or higher. Dealer financing, credit unions, and banks all offer different rates — always shop around before accepting the first offer.

Shorter loan terms (24–36 months) result in higher monthly payments but significantly less total interest paid and faster equity build-up. Longer terms (60–72 months) lower the monthly payment but cost more in total interest and increase the risk of being 'underwater' — owing more than the car is worth. A common rule of thumb is to keep new car loans at 60 months or less and used car loans at 48 months or less.

A trade-in reduces the amount you need to finance. For example, if a vehicle costs $30,000 and you trade in a car worth $5,000, you only need to finance $25,000 (minus any down payment). This lowers your monthly payment and reduces total interest paid. If you still owe money on the trade-in vehicle (negative equity), that remaining balance may be rolled into the new loan, increasing your financed amount.

Yes — in most cases, sales tax on a vehicle purchase is either paid upfront or rolled into the financed amount. This calculator adds sales tax to the vehicle price before subtracting your down payment and trade-in to determine the loan amount. Tax rates vary widely by state and locality; some states charge 0% while others exceed 10%. Check with your state's DMV or dealer for the exact rate in your area.

The interest rate is the base cost of borrowing the principal. APR (Annual Percentage Rate) is a broader measure that includes the interest rate plus any additional fees and charges (such as origination fees) expressed as a yearly rate. For car loans, the APR is the most useful number for comparison shopping. This calculator uses APR to compute your monthly payment.

This calculator estimates principal, interest, and sales tax only. It does not include dealer fees (documentation fees, destination charges), title and registration fees, extended warranty costs, GAP insurance, or ongoing costs like auto insurance and maintenance. Add these to your total budget when planning a vehicle purchase.

GAP (Guaranteed Asset Protection) insurance covers the difference between what you owe on a car loan and the car's actual cash value if the vehicle is totaled or stolen. New vehicles depreciate quickly — some lose 20% of value in the first year. If you make a small down payment or choose a long loan term, you may owe more than the car is worth early in the loan. GAP insurance is particularly valuable in these situations and is often offered by dealers and lenders.