Auto Loan Calculator

How This Calculator Works

An auto loan payment is calculated on the vehicle price minus any down payment and trade-in value, plus sales tax, financed at the loan’s rate and term. Enter those figures and this calculator estimates your monthly payment — built the way an actual car purchase works, not just a generic loan amount you’d have to compute yourself first.

Your down payment and trade-in value both reduce the amount you finance, but only your trade-in value reduces the amount sales tax is calculated on — a down payment is paid from already-taxed money, while a trade-in is treated as part of the transaction itself. This trade-in tax credit is how most US states handle it, but not all states give it, and the rule can change — check your own state’s rule and uncheck “My state taxes only the price minus the trade-in value” if it doesn’t apply to you, and the calculator taxes the full vehicle price instead.

If you still owe money on the vehicle you’re trading in, enter that under “Amount owed on trade-in.” Most of the time, the trade-in’s value simply reduces what you finance — but if the amount owed is more than the trade-in is worth (a common situation called being “underwater” or having negative equity), that difference doesn’t disappear — it gets rolled into your new loan instead, increasing the amount financed. Under “Add cash incentives, fees” you can also enter any manufacturer rebates (which reduce the amount financed, same as a down payment) and title/ registration/other fees, plus choose whether to roll those fees into the loan or pay them upfront.

The Formula

Taxable amount and financed amount:

$$\vF{\text{Sales Tax}} = (\vA{\text{Vehicle Price}} - \vB{\text{Trade-In Value}}) \times \text{Tax Rate}$$ $$\vE{\text{Net Trade-In Equity}} = \vB{\text{Trade-In Value}} - \vC{\text{Amount Owed on Trade-In}}$$ $$\text{Amount Financed} = \vA{\text{Vehicle Price}} + \vF{\text{Sales Tax}} + \text{Fees (if Rolled In)} - \vD{\text{Down Payment}} - \text{Cash Incentives} - \vE{\text{Net Trade-In Equity}}$$

Note that a negative net trade-in equity (an underwater trade-in) subtracts a negative number — which adds to, rather than reduces, the amount financed.

Monthly payment (the standard fixed-rate amortization formula):

$$M = P \times \frac{r(1+r)^{n}}{(1+r)^{n} - 1}$$

where $P$ is the amount financed, $r$ is the monthly interest rate (annual rate divided by 12), and $n$ is the number of monthly payments.

Worked Example

A $30,000 vehicle, with a $3,000 down payment, a $2,000 trade-in, 7% sales tax, a 6.5% APR, and a 60-month loan:

1. Sales tax: $(\vA{\$30{,}000} - \vB{\$2{,}000}) \times 7\% = \vF{\$1{,}960}$.
2. Amount financed: $\vA{\$30{,}000} + \vF{\$1{,}960} - \vD{\$3{,}000} - \vB{\$2{,}000} = \$26{,}960$.
3. Monthly payment: $527.50.
4. Total paid over 60 months: $527.50 × 60 = $31,650.20, so total interest is $31,650.20 − $26,960 = $4,690.20.

Common Mistakes

• Assuming trade-in tax credit rules are the same everywhere. Whether a trade-in reduces the taxable amount (and by how much) varies by state — check the per-state toggle above rather than assuming your state works like a neighboring one.
• Rolling negative equity into the new loan without realizing it. If a trade-in is still worth less than what’s owed on it, that shortfall gets added to the new loan’s amount financed — quietly increasing the loan size and total interest paid beyond the new vehicle’s own price.
• Only comparing the dealer’s financing offer. Dealer-arranged financing is convenient, but a pre-approved rate from a bank or credit union is often worth comparing before signing — the rate used here should be the one you’re actually being offered, not an assumed “typical” rate.