Auto Loan Calculator
Work out a realistic car payment — with sales tax, fees, your deposit, and a trade-in all accounted for — and see what the vehicle really costs once interest is added.
What this works out
Car finance is rarely just the sticker price divided by a term. Sales tax, dealer fees, a deposit, and a trade-in all land between the advertised number and the amount you actually borrow. This calculator walks through each step and shows the payment at the end of it.
The trade-in tax advantage
This is the detail most buyers miss. In most states, sales tax is charged on the price after the trade-in allowance, not on the full price.
On a $32,000 car with a $6,500 trade-in and a 6.5% rate, tax is charged on $25,500 rather than $32,000 — a saving of about $423. That is real money, and it means a dealer's trade-in offer can beat a slightly higher private sale price. Compare the trade-in offer plus the tax saving against what you would net selling it yourself.
A handful of states tax the full purchase price regardless. Check yours before relying on the tax line.
Reading the results
The monthly payment is what the dealer will focus on. The figure worth your attention is total cost — deposit, trade-in, and every payment added together.
Dealers can hit almost any monthly payment by extending the term. A payment that looks comfortable over 84 months can cost thousands more than a slightly higher one over 48. Always compare the total, not the instalment.
A worked example
A $32,000 vehicle, $4,000 down, a $6,500 trade-in, 6.5% sales tax, $600 of fees, financed at 7.2% over 60 months.
Tax is charged on $25,500, adding $1,657.50. With fees, the total comes to $34,257.50; less the deposit and trade-in, $23,757.50 is financed. That gives a payment of $472.67 a month and about $4,603 of interest over five years. All in, the car costs roughly $38,860.
Long terms and negative equity
Cars lose value fastest in their first years, while a long loan repays principal slowest in exactly that period. The two combine to leave many borrowers owing more than the car is worth — negative equity.
It matters when you come to sell or if the car is written off, because the shortfall does not disappear. It gets rolled into the next loan, and the problem compounds. A larger deposit and a shorter term are the two reliable defences.
What this does not cover
- Depreciation. Not a loan cost, but usually the largest cost of owning a car.
- Running costs. Insurance, fuel, maintenance, and registration are all excluded.
- Dealer add-ons. Extended warranties, gap insurance, and paint protection are only included if you enter them under fees.
- Manufacturer incentives. Zero-percent offers and cash rebates often cannot be combined. Run both scenarios separately and compare.
- Leasing. A lease is priced quite differently and is not modelled here.
Frequently asked questions
Does a trade-in really reduce the sales tax?
In most states, yes — tax is charged on the price after the trade-in allowance. On a mid-priced car that is commonly several hundred dollars.
A minority of states tax the full price regardless of a trade-in. Check your state revenue department before counting on it.
Should I take the 0% finance or the cash rebate?
They are usually alternatives rather than a package. Work out the total cost each way: the rebate lowers the amount financed but you pay interest, while 0% finance costs nothing to borrow but the price stays higher.
Run both through this calculator and compare total cost. Which wins depends on the rebate size, the rate you would otherwise get, and the term.
How much should I put down?
Enough to stay ahead of depreciation. Around 20% on a new car is a common target, because it roughly offsets the value lost in the first year or two and keeps you out of negative equity.
Less is workable on a used car, which has already taken its steepest depreciation.
Is a 72 or 84 month car loan a bad idea?
It lowers the payment and raises both the total interest and the time spent owing more than the car is worth. On a long term you can still be paying for a vehicle well past the point it needs significant repairs.
If the only way a car fits the budget is a seven-year term, that is usually a signal about the car rather than the term.
Should I finance through the dealer or my bank?
Get a quote from your own bank or credit union first, then let the dealer try to beat it. Dealer finance is sometimes genuinely cheaper thanks to manufacturer subsidies, and sometimes carries a markup. Having an approved rate in hand is what lets you tell the difference.
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This calculator is provided for general educational and estimation purposes only. It does not constitute financial or lending advice, and it is not a finance offer. Sales tax treatment of trade-ins differs by state, and dealer charges vary. Confirm the figures on the finance agreement before signing.