🚗 Car Payment Calculator
Calculate your monthly car loan payment including down payment, trade-in value, and sales tax. Get a complete breakdown showing principal, interest, and total loan cost.
How This Calculator Works
This car payment calculator uses the standard auto loan amortization formula to calculate your monthly payment based on the amount financed, interest rate, and loan term.
The calculation process:
- Loan Amount: Vehicle price minus down payment minus trade-in value
- Sales Tax: Applied to the vehicle price after trade-in deduction (before down payment)
- Total Financed: Loan amount plus sales tax (many lenders allow you to finance the tax)
- Monthly Payment: Calculated using:
P × [r(1+r)^n]/[(1+r)^n-1]where P=principal, r=monthly interest rate, n=number of months - Total Interest: Total of all payments minus the amount financed
- Total Cost: Down payment + trade-in + all loan payments (what you actually pay for the car)
The pie chart shows the breakdown between principal (the actual car cost), interest (what you pay the lender), and sales tax.
Example Calculation
Example: $35,000 car with $5,000 down, 60-month loan at 6.5% APR
Vehicle Price: $35,000
Down Payment: $5,000
Trade-In: $0
Sales Tax: 8% × $35,000 = $2,800
Loan Amount: $35,000 - $5,000 = $30,000
Total Financed: $30,000 + $2,800 = $32,800
Monthly Payment: $641
Total Interest: $5,661
Total Cost: $5,000 down + $38,461 (60 payments) = $43,461
Interpretation: You'll pay $641/month for 5 years. The car costs $35,000 but you'll pay $43,461 total when including down payment, interest, and tax.
Common Questions
Should I put 20% down on a car?
The 20/4/10 rule suggests 20% down, 4-year loan, and payments under 10% of gross income. A 20% down payment reduces your loan amount, lowers monthly payments, and helps you avoid being "underwater" (owing more than the car's worth). However, if you have a low interest rate (under 4%), you might prefer to invest that cash elsewhere.
Is a 60-month or 72-month loan better?
Shorter loans (36-60 months) have higher monthly payments but significantly lower total interest. Longer loans (72-84 months) offer lower monthly payments but you'll pay much more in interest and risk being underwater. Use our calculator to compare both options. Most financial experts recommend 60 months or less.
Should I finance sales tax or pay it upfront?
Paying sales tax upfront saves money on interest (you're not paying interest on the tax over the loan term). However, if cash is tight and your interest rate is low, financing the tax preserves your emergency fund. Our calculator shows the difference so you can decide based on your situation.
How does my trade-in affect the payment?
Trade-in value reduces both your loan amount and the amount subject to sales tax. For example, a $5,000 trade-in on a $30,000 car means you only pay tax on $25,000 (not $30,000), and you're only financing $25,000 (plus tax). This significantly reduces your monthly payment compared to no trade-in.