How the auto loan calculator works
The calculator first works out how much you need to borrow, then applies the standard amortization formula used for fixed-rate car loans.
Amount financed = Price + Sales tax + Fees − Down payment − (Trade-in value − Amount still owed)
Monthly payment = A × r(1 + r)n ÷ ((1 + r)n − 1), with r = APR ÷ 12 and n = months
If you owe more on your trade-in than it is worth (negative equity), the shortfall is added to the new loan, which raises both the payment and the interest. The Consumer Financial Protection Bureau suggests getting preapproved by a bank or credit union before visiting a dealer, so you can compare the dealer's APR against an offer you already hold.
Worked example
A $35,000 car with $4,000 down and an $8,000 trade-in that still has $3,000 owed leaves $5,000 of trade equity. In a state that taxes price minus trade-in at 7%, sales tax is 7% of $27,000 = $1,890. With $700 of fees, the amount financed is $35,000 + $1,890 + $700 − $4,000 − $5,000 = $28,590. At 7.5% APR for 60 months the payment is $572.88, and total interest is about $5,783. If your state taxes the full price, tax rises to $2,450 and the payment to $584.11.
Related guide
Frequently asked questions
How is a car payment calculated?
Car loans use the amortization formula: payment = A × r(1 + r)^n ÷ ((1 + r)^n − 1), where A is the amount financed, r is the APR divided by 12 and n is the number of months.
Does a trade-in reduce sales tax?
In most states, yes: sales tax is charged on the price minus the trade-in value. A few states, including California, tax the full price. Choose 'Full price' in the calculator if your state does not give a trade-in credit.
Should I roll fees and taxes into the loan?
Paying taxes and fees upfront lowers the amount financed and the total interest. Rolling them in keeps more cash in hand but you pay interest on them for the whole term.
What is negative equity?
It is owing more on your current car than its trade-in value. The difference is usually added to your new loan, so you pay interest on a car you no longer own.
Is a longer car loan a good idea?
A longer term lowers the monthly payment but increases total interest, and you are more likely to owe more than the car is worth for longer.
Updated October 2026. Results are estimates for education, not financial or medical advice. All math runs in your browser; nothing you type is sent anywhere.