dopecalc

Auto Loan Calculator

Calculate your monthly car payment including sales tax, down payment, and trade-in value. See a complete breakdown of your auto loan.

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About this Calculator

Calculate your monthly car payment including sales tax, down payment, and trade-in value. See a complete breakdown of your auto loan.

Formula & Calculations

Formula

M = P [ r(1+r)^n ] / [ (1+r)^n - 1 ]
Where:
  • M=Monthly auto loan payment
  • P=Principal loan amount (car price plus tax minus down payment and trade-in)
  • r=Monthly interest rate (annual rate / 12)
  • n=Total number of monthly payments (loan term in years × 12)

Assumptions

  • Assumes a fixed interest rate for the entire loan term.
  • Sales tax is applied to the car price before deducting down payment and trade-in.
  • Does not include dealer fees, registration, title fees, or extended warranties.

Calculation Examples

Example 1

Inputs:Car Price: $35,000, Down Payment: $5,000, Trade-In: $3,000, Interest: 5.5%, Term: 5 Years, Tax: 7%
Result:Monthly Payment: $548.63, Total Interest: $3,784.35, Total Cost: $40,784.35

With tax applied first, the loan amount is reduced by down payment and trade-in. The 5-year term at 5.5% yields a manageable monthly payment under $550.

Example 2

Inputs:Car Price: $25,000, Down Payment: $2,500, Trade-In: $0, Interest: 4.9%, Term: 4 Years, Tax: 6%
Result:Monthly Payment: $539.48, Total Interest: $2,495.04, Total Cost: $27,495.04

A shorter 4-year term with a lower rate results in higher monthly payments but significantly less total interest.

Example 3

Inputs:Car Price: $50,000, Down Payment: $10,000, Trade-In: $8,000, Interest: 7%, Term: 6 Years, Tax: 8.5%
Result:Monthly Payment: $600.96, Total Interest: $9,232.94, Total Cost: $59,232.94

Even with a substantial down payment and trade-in, a high interest rate and long term increase total borrowing cost significantly.

Frequently Asked Questions

Should I put more money down or pay off my trade-in first?

If you owe more on your trade-in than it's worth (negative equity), the difference gets rolled into your new loan. It's generally better to pay down negative equity before trading in, or make a larger down payment to offset it.

How does sales tax affect my auto loan?

Sales tax is typically calculated on the full purchase price of the vehicle before any down payment or trade-in is applied. This means tax increases the total amount you need to finance.

Is a longer loan term better for a car?

Longer terms (72-84 months) lower monthly payments but result in much higher total interest paid. You also risk owing more than the car is worth (negative equity) for a longer period. 48-60 month terms are generally recommended.