How to use the car payment calculator
Work from a written buyer's order if you have one. Start with the negotiated price before tax and fees, not a monthly payment target. Keep cash down, a rebate and the trade-in in their own fields so you can see what each one does.
Pick the trade-in tax treatment that matches the deal. Some places tax the price minus your trade-in and some tax the full price. Your buyer's order or state rules tell you which.
- Enter the negotiated vehicle price, cash down and any cash rebate.
- Enter the trade-in allowance and the payoff you still owe on that car.
- Enter the sales-tax rate, choose the trade-in tax treatment and add fees and add-ons.
- Enter the fixed interest rate and the term in months.
- Calculate, then check the out-the-door price, amount financed, payment and total interest.
Car loan example: $32,000 vehicle over 60 months
Here's a new car loan from start to finish. The price is $32,000, you put $3,000 down, there's no trade-in, sales tax is 7% and fees are $600. Tax adds $2,240, so the out-the-door price is $34,840 and you finance $31,840.
At 7.2% for 60 months, the payment is $633.48. The first payment includes $191.04 of interest. Over five years you pay $38,008.74, of which $6,168.74 is interest.
| Loan term | Monthly payment | Total interest | Total loan payments |
|---|---|---|---|
| 36 months | $986.04 | $3,657.47 | $35,497.47 |
| 48 months | $765.41 | $4,899.50 | $36,739.50 |
| 60 months | $633.48 | $6,168.74 | $38,008.74 |
| 72 months | $545.90 | $7,465.04 | $39,305.04 |
How the amount financed is built
The payment is only as good as the amount financed behind it. The calculator builds it the same way a buyer's order does, then runs the standard fixed-rate loan formula. At 0% it divides the amount financed evenly over the months.
Net trade-in equity = trade-in allowance - trade-in payoffSales tax = taxable amount x tax rateOut-the-door price = vehicle price + sales tax + feesAmount financed P = out-the-door price - down payment - rebate - net trade-in equityMonthly payment = P x r / (1 - (1 + r)^(-n)), where r = annual rate / 100 / 12
Auto loan calculator with trade-in and negative equity
A trade-in has two numbers: what the dealer gives you for it and what you still owe on it. The difference is your equity. Positive equity lowers the new loan. If you owe more than the car is worth, the shortfall gets added to the new loan unless you pay it in cash.
Take the $32,000 example with $3,000 down and tax on the price minus the trade. An $8,000 trade with a $5,000 payoff gives $3,000 of equity, and you finance $28,280 at $562.65 a month. A $10,000 trade with a $13,000 payoff is $3,000 of negative equity. You finance $34,140 and pay $679.24 a month, more than with no trade at all.
| Trade-in | Net equity | Amount financed | Monthly payment | Total interest |
|---|---|---|---|---|
| None | $0 | $31,840.00 | $633.48 | $6,168.74 |
| $8,000 value, $5,000 owed | +$3,000 | $28,280.00 | $562.65 | $5,479.01 |
| $10,000 value, $13,000 owed | -$3,000 | $34,140.00 | $679.24 | $6,614.34 |
Used car loan calculator example
The math is the same for a used car. What changes is the price and often the rate, since lenders can price loans by the car's age and mileage. Get a quote for the specific vehicle before you rely on a number.
Say you buy an $18,000 used car with $2,000 down, 7% tax and $600 of fees. You finance $17,860. If the offer is 9% for 48 months, the payment is $444.45 and interest totals $3,473.45. Stretching to 60 months drops the payment to $370.74 but adds $911.20 of interest.
When to double-check the numbers
Use this as an arithmetic check on a deal, not as a lender quote. Daily interest, the first payment date, rounding and financed add-ons can make the contract a little different. If a figure doesn't match, ask the dealer to explain it instead of changing inputs until the payment fits.
Use the note rate from the contract here, not the APR. APR can include lender fees, so it gives a payment that's slightly high. Compare APRs across offers on their own.
- Rebates and promotional rates often can't be combined, so model each offer separately.
- Sales-tax rules on trade-ins differ by state.
- Insurance, fuel, maintenance and registration renewals aren't in the payment.
- Longer terms keep you owing more than the car is worth for longer.
Sources
These CFPB and FTC pages explain auto loan terms, comparing offers, out-the-door pricing and negative equity.