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Car Loan Calculator

Work out the monthly payment on a vehicle once the down payment, trade-in and sales tax have been settled.

Inputs
Car loan resultCalculated
Monthly payment605.95 for 60 months
Formula
Amount financedprice + sales tax - down payment - trade-in
PaymentP x i / (1 - (1 + i) ^ -n), i = APR / 12
Inputs
Vehicle price32,000.00
Down payment4,000.00
Trade-in value0.00
Sales tax rate7.00%
APR7.50%
Term60 months (5 years)
Working
Sales tax(32,000.00 - 0.00) x 7.00% = 2,240.00
Amount financed32,000.00 + 2,240.00 - 4,000.00 - 0.00 = 30,240.00
Monthly rate i7.50% / 12 = 0.00625
Payment30,240.00 x 0.00625 / (1 - (1 + 0.00625) ^ -60) = 605.95
Results
  Amount financed                     30,240.00
  Monthly payment                     605.95
  Total of payments                   36,356.85
  Total interest paid                 6,116.85
  Interest as a share of the loan     20.23%
  Total cost including down payment   40,356.85
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About the Car Loan Calculator

A car payment is an ordinary amortising loan, so the whole answer rests on three numbers: the amount actually financed, the monthly rate and the count of payments. The amount financed is where dealers and buyers most often disagree, because sales tax is usually charged on the price after a trade-in is deducted, then added back into the loan. On a 32,000 vehicle with 4,000 down and 7 percent tax, that leaves 30,240 to borrow, not 28,000.

From there each payment is fixed, but the split between interest and principal is not. Early payments are mostly interest because the balance is large, which is why paying an extra amount in the first year saves far more than the same amount in the last. At 7.5 percent over 60 months the payment lands at 605.95, and 6,116.85 of the 36,356.85 handed over is interest.

A few things sit outside this calculation on purpose: insurance, registration, extended warranties, dealer add ons and any negative equity rolled in from a previous loan. Add those to the price if the finance office is folding them into the deal, otherwise the payment shown will look pleasantly low compared with the contract. Lengthening the term always lowers the payment and always raises the total interest, which the results block makes visible in one line.

How to use

  1. Enter the vehicle price you agreed, before tax.
  2. Add your cash down payment and any trade-in allowance as separate figures.
  3. Set the local sales tax rate, or leave it at zero if tax is paid separately.
  4. Enter the APR and the term in months, then compare the payment against the total interest line.

Common questions

How is the monthly payment calculated?
Payment = P x i / (1 - (1 + i) ^ -n), where P is the amount financed, i is the APR divided by 12 and n is the number of monthly payments.
Is sales tax charged on the trade-in?
In most places the trade-in reduces the taxable price, which is what this tool assumes. A few regions tax the full price, so add the difference to the price field if yours does.
Why does a longer term cost more?
The balance stays high for longer, so interest keeps accruing. Going from 48 to 72 months cuts the payment but can add thousands to what you hand over.
Does a zero percent offer work here?
Yes. Enter 0 as the APR and the payment becomes the amount financed divided by the number of months.