Calculate monthly car payments including down payment, trade-in value, and interest rate.
Enter the vehicle price, your cash down payment and any trade-in value, then the sales tax rate for where you will register the car and any dealer, title and registration fees. Choose whether taxes and fees are rolled into the loan or paid upfront, then enter the APR and loan term.
The calculator applies sales tax to the price after the trade-in credit (how most states do it). 0% APR promotional offers are supported — the payment is simply the amount financed divided by the number of months.
Sales tax = (Price − Trade-in) × tax rateAmount financed = Price − Down − Trade-in (+ tax + fees if financed)M = P × r / (1 − (1 + r)^−n)r = APR ÷ 12, n = term in months.
Start with the vehicle price, subtract your down payment and trade-in, and add sales tax and fees if you finance them. That amount financed is then amortized with the standard formula M = P × r / (1 − (1 + r)^−n), where r is the APR divided by 12 and n is the number of months.
Most US states charge sales tax only on the difference between the new vehicle price and your trade-in value, which can save hundreds of dollars. A few states tax the full purchase price, so check your state’s rules.
Rates depend mainly on your credit score, whether the car is new or used, the loan term and current market conditions. Borrowers with excellent credit get the lowest rates; used-car and longer-term loans usually cost more. Compare quotes from your bank or credit union with dealer financing.
Longer terms lower the monthly payment but increase total interest, and because cars depreciate quickly you may owe more than the car is worth for years. A shorter term costs less overall if you can afford the payment.
If you can get a very low rate (for example a 0% promotion) and your cash can earn more elsewhere, financing can make sense. Otherwise paying cash avoids interest entirely. Watch for dealers that offer 0% financing in place of a cash rebate — compare both offers.
New car loans typically offer lower interest rates (5–7%) compared to used car loans (7–10%) because new cars have a more predictable value. However, the rapid depreciation of new cars means you may owe more than the vehicle is worth for the first few years. Used cars aged 2–3 years often offer the best value: lower price, slower depreciation, and still reliable.
Increase your down payment to reduce the loan principal. Choose a shorter loan term — while monthly payments are higher, you pay significantly less total interest. Get pre-approved from your bank or credit union before visiting the dealer to have leverage in rate negotiations. Avoid extending loan terms beyond 60 months to prevent being underwater on the loan.
Did you know?
The average new car loan in the US is now $40,290 with a monthly payment of $726 over 68 months. The average used car loan is $26,533 with a $525 monthly payment.
The first auto loan was issued in 1919 by General Motors Acceptance Corporation (GMAC), created specifically to help middle-class Americans afford cars. Before this, automobiles were luxury items purchased only with cash. The introduction of auto financing transformed the automotive industry and American culture.
A new car loses approximately 20% of its value in the first year and about 60% over five years, making depreciation the largest cost of car ownership.
The average auto loan interest rate for new cars is 6.84% for borrowers with credit scores above 720, but can exceed 14% for subprime borrowers.
Approximately 85% of new car purchases and 55% of used car purchases in the US are financed through loans or leases.
Making a 20% down payment can save you thousands in interest and helps you avoid being "upside down" (owing more than the car is worth).