Auto Loan Calculator
Calculate your monthly car payment with trade-in value, sales tax, and compare different loan terms side by side.
How to Use the Auto Loan Calculator
Buying a car is one of the largest financial decisions most people make, second only to purchasing a home. Our auto loan calculator helps you understand exactly what your monthly payment will be before you ever set foot in a dealership. Simply enter the vehicle price, your down payment, any trade-in value, the interest rate offered, and the sales tax rate in your state. The calculator instantly computes your monthly payment along with a full cost breakdown.
One of the most powerful features is the "What If" comparison table, which shows your payment across every common loan term from 24 to 84 months. This lets you see the trade-off between a lower monthly payment (longer term) and less total interest paid (shorter term). Many buyers focus solely on the monthly number, but the total interest difference between a 36-month and 72-month loan can easily exceed several thousand dollars.
Understanding Auto Loan Terms
Auto loans typically range from 24 to 84 months. Shorter terms like 24 or 36 months mean higher monthly payments but substantially lower total interest costs. Longer terms of 72 or 84 months reduce the monthly burden but come with risks — you may end up "underwater" on the loan, meaning you owe more than the car is worth. This is especially problematic because vehicles depreciate rapidly, losing roughly 20% of their value in the first year alone.
The Role of Down Payments and Trade-Ins
A larger down payment reduces the amount you need to finance, which lowers both your monthly payment and total interest charges. Financial experts generally recommend putting down at least 20% of the vehicle's purchase price. If you have an existing vehicle, its trade-in value functions similarly to a down payment — it reduces the principal balance of your new loan. Keep in mind that you can often negotiate trade-in values, and getting quotes from multiple dealerships or services like CarMax can help you maximize this amount.
How Sales Tax Affects Your Loan
Sales tax is frequently overlooked when budgeting for a vehicle purchase. In most states, sales tax is calculated on the purchase price minus any trade-in value, and this tax amount is typically rolled into the loan. For a $35,000 vehicle with a 7% sales tax rate, that adds $2,450 to your financed amount — increasing both your monthly payment and total interest. Some states like Oregon, Montana, New Hampshire, and Delaware have no sales tax on vehicles, which can represent significant savings.
Tips for Getting the Best Auto Loan Rate
Your interest rate is determined primarily by your credit score, the loan term, and whether you're buying new or used. To secure the best rate, check your credit score before shopping, get pre-approved through your bank or credit union (which often offer rates 1-2% lower than dealer financing), and keep your loan term at 60 months or less. New car rates are typically lower than used car rates because the vehicle serves as more valuable collateral. Shopping multiple lenders won't hurt your credit score if done within a 14-day window, as credit bureaus treat multiple auto loan inquiries as a single hard pull.
Frequently Asked Questions
As of 2025, average new car loan rates range from about 5% to 7% for borrowers with good credit (700+). Used car rates are typically 1-2% higher. Borrowers with excellent credit (750+) may qualify for rates as low as 3-4%, while those with poor credit could face rates of 10-20% or more. Manufacturer promotional rates of 0% or 1.9% are sometimes available on select new models.
While a longer term reduces your monthly payment, it significantly increases the total interest you pay. For example, on a $30,000 loan at 6%, a 36-month term costs about $2,850 in interest, while a 72-month term costs roughly $5,800 — more than double. Longer terms also increase the risk of being "upside down" on the loan. Choose the shortest term you can comfortably afford.
Financial experts recommend at least 20% down on a new car and 10% on a used car. A larger down payment means a smaller loan, lower monthly payments, less interest, and reduces the risk of negative equity. However, don't drain your emergency fund — balance your down payment against maintaining 3-6 months of living expenses in savings.
Credit unions and banks often offer lower interest rates than dealership financing. However, dealers sometimes provide promotional rates (like 0% APR) on specific models that can't be beaten. The best strategy is to get pre-approved at your bank or credit union first, then let the dealer try to beat that rate. This gives you negotiating leverage and ensures you have a competitive baseline.
In most states, yes. Sales tax is calculated on the difference between the new car's price and your trade-in value. So if you buy a $35,000 car and trade in your old car for $10,000, you only pay sales tax on $25,000. However, this varies by state — some states don't offer this trade-in tax credit, so check your local laws.
This calculator is for educational purposes only. Results are estimates and should not be considered financial advice. Actual payments may vary based on lender terms, fees, and your creditworthiness. Consult a qualified financial advisor for personalized guidance.