Auto Loan Calculator

How to calculate a car payment

Start with the out-the-door components rather than the advertised vehicle price alone. Add applicable sales tax and financed fees, subtract the down payment and trade-in value, then add any loan balance still owed on the trade-in.

The resulting amount financed is amortized over the selected number of monthly payments. The calculator separates the purchase inputs from the interest calculation so a dealer quote can be checked line by line.

1. Enter the negotiated vehicle price.
2. Add cash down and both sides of any trade-in.
3. Choose the tax treatment and enter financed fees.
4. Enter APR and term, then compare the payment and total interest.

Car loan payment formula

For a fixed-rate installment loan, the monthly payment depends on principal P, monthly rate r and number of payments n. The annual note rate is divided by 12 and by 100 to obtain r. At zero interest, payment is simply principal divided by n.

Amount financed and out-the-door price

Vehicle price and amount financed are different numbers. Taxes, title, registration, documentation products and optional add-ons can raise the amount; cash and positive trade-in equity reduce it.

This tool treats fees as financed because that is the conservative default for a payment estimate. If a fee will be paid in cash, leave it out of the financed-fees field and include it separately in your purchase budget.

Trade-in value and negative equity

If the vehicle is worth more than its payoff amount, the difference is positive equity and lowers the new loan. If the payoff is larger, the difference is negative equity and rolling it into the next loan increases both payment and interest.

The CFPB recommends comparing the amount financed, APR, loan length and monthly payment across offers. A lower payment obtained only by extending the term can cost more overall.

Sales tax and fees

US sales-tax rules differ. Some transactions tax the full selling price, some allow a trade-in credit, and some vehicles or buyers may receive different treatment. The three tax modes make the assumption explicit instead of silently choosing one rule.

Dealer documentation, destination, title and registration charges also vary. Use the buyer's order or written quote to replace the default estimate before relying on the result.

Interest rate, APR, term and total interest

The payment formula uses the annual interest rate on the note. The disclosed APR is a broader comparison measure that can include certain finance charges, so it may be higher and should be compared separately across offers. A longer term usually lowers the monthly payment but keeps the balance outstanding longer.

The FTC advises getting the total cost in writing and comparing financing terms, including APR, number of payments and the amount of each payment. Monthly affordability alone does not show the full cost.

What this estimate excludes

The result excludes recurring insurance, fuel, maintenance, parking and future registration renewals. It also does not model rebates, promotional conditions, variable rates, late charges, prepayment rules or loan products with balloon payments.

Rounding can make the lender's final payment differ by a few cents. The signed contract and lender disclosure control the actual obligation.

How loan term changes the same financed amount