Car Payment Calculator

Say you're buying a $35,000 vehicle with $5,000 down, no trade-in, a 7.5% APR, a 60-month term, and 6% sales tax. The tax adds $2,100, so you finance $32,100. That works out to about $643 per month, and over five years you'd pay roughly $6,500 in interest on top of the principal. This car payment calculator shows that full picture - the monthly payment, the total interest, and the total cost of the loan - so you know the number before you sit down at the dealership.

How the monthly payment is calculated

An auto loan is a fixed-rate amortizing loan, so the payment is the same every month and uses this formula:

where P is the amount financed, r is the monthly interest rate (APR ÷ 12), and n is the number of monthly payments (the term in months). Early in the loan, most of each payment goes toward interest; later, more goes toward principal. The amortization table shows that shift year by year.

What counts as the amount financed

You don't borrow the sticker price - you borrow the amount financed: vehicle price plus sales tax, minus your down payment and trade-in value. In most states you can roll sales tax into the loan, which is why it's added here. A bigger down payment or trade-in shrinks the amount financed, which lowers both your monthly payment and the total interest, and helps you avoid being "upside down" (owing more than the car is worth).

Choosing a loan term

Auto loans commonly run 36 to 84 months. A longer term lowers the monthly payment but increases total interest and keeps you in negative equity longer. A shorter term costs more each month but far less overall. The same $32,100 at 7.5% costs about $643/month over 60 months but roughly $492/month over 84 months - yet the 84-month loan pays thousands more in interest. Switch the term in the calculator to compare.

Lower your car payment

• Bigger down payment or trade-in: directly reduces the amount financed.
• Lower APR: shop banks, credit unions and dealer financing - your credit score has a large effect on the rate. The Auto Loan Calculator lets you test how each rate quote changes the payment.
• Shorter term: raises the monthly payment but cuts total interest significantly.
• Less expensive vehicle: the simplest lever - a lower price lowers everything else. If you are still setting a budget, start with the Car Affordability Calculator.

How to use this calculator

You only need a handful of numbers from the listing or dealer quote. Work through them in order:

1. Vehicle price: enter the negotiated out-the-door price of the car, before tax.
2. Down payment: the cash you'll pay up front. More down means a smaller loan.
3. Trade-in value: the amount the dealer credits for your current car, if any. It works like extra cash down.
4. APR: the annual percentage rate from your loan offer. If you don't have one yet, use a realistic estimate for your credit tier and update it once you're pre-approved.
5. Loan term: the length of the loan in months (commonly 36, 48, 60, 72 or 84).
6. Sales tax: your state or local rate. Set it to 0% if you pay tax separately or live somewhere without vehicle sales tax.

The calculator returns your monthly payment, the total interest you'll pay over the loan, the total of payments, and a year-by-year amortization schedule. Change any input to see how it moves the numbers - that side-by-side comparison is the fastest way to find the deal that fits your budget.

A second worked example

Suppose you're buying a used car priced at $22,000, with $3,000 down and a $4,000 trade-in, an APR of 9%, a 48-month term, and a 7% sales tax. Sales tax on $22,000 is $1,540, so the amount financed is $22,000 + $1,540 − $3,000 − $4,000 = $16,540. At 9% over 48 months that's roughly $412 per month, with about $3,220 in total interest. Now stretch the same loan to 72 months: the payment drops to around $298, but total interest climbs to roughly $4,930 - you'd pay about $1,700 more in interest just to lower the monthly figure. That trade-off is the single most important thing this tool helps you see.

Who this calculator is for

It's built for anyone weighing an auto loan: first-time buyers trying to set a realistic budget, shoppers comparing dealer financing against a credit-union pre-approval, and current owners deciding whether a bigger down payment or a shorter term is worth it. Because it isolates the financing math from the sales pitch, you can walk into the dealership already knowing what a fair payment looks like for the price, rate and term you're considering.

What changes your monthly payment the most

Four inputs drive the payment, and they don't all pull with the same force. Knowing which lever moves the number fastest helps you focus your negotiation:

• Loan term has the biggest effect on the monthly figure. Spreading the same balance over more months drops the payment quickly - but it's the lever most likely to cost you in total interest, so use it carefully.
• Amount financed (price, minus down payment and trade-in) scales the payment almost one-for-one. Cutting the price by $2,000, or adding $2,000 down, has the same effect on what you borrow.
• APR matters more on larger balances and longer terms. On a short, small loan a point of rate is minor; on a big 72- or 84-month loan it can swing the payment and total cost meaningfully.
• Sales tax is usually the smallest lever, but financing it rather than paying it up front quietly adds it to the balance you pay interest on.

The practical takeaway: protect the total cost by keeping the term as short as you can comfortably afford, then use down payment and a competitive APR to bring the monthly number into range - rather than reaching for a longer term first.

Buying versus leasing

This calculator models a purchase loan, where every payment builds equity and you own the car outright at the end. A lease is different: you pay for the vehicle's depreciation over the lease term plus a finance charge, the monthly payment is usually lower, but you return the car (or buy it at a set price) when the lease ends and you build no equity. If you tend to keep cars for many years and want no payment once the loan is done, buying usually wins on total cost. If you prefer a newer car every few years and a lower monthly outlay, a lease can fit - just compare the full cost, not only the monthly figure. Run the numbers side by side with the Car Lease Calculator before you decide.

New vs. used: how financing differs

The same payment math applies whether you buy new or used, but the surrounding numbers shift in important ways. New cars usually qualify for the lowest advertised APRs and occasional manufacturer-subsidized rates (sometimes 0% for top-tier credit), but they also lose value fastest - a typical new vehicle sheds roughly 20% of its value in the first year and around half over five years. That steep early depreciation is exactly why a small down payment on a new car so easily leaves you upside down. Used cars cost less to finance in absolute dollars and depreciate more slowly because the worst of the drop already happened, but lenders generally charge a higher APR on used loans and cap the term, especially for older or higher-mileage vehicles. When you compare a new and a used option in this calculator, change both the price and the APR - not just the price - so the comparison reflects the real cost of each path.

How the term affects your equity over time

Equity is the difference between what your car is worth and what you still owe. With a short term, your balance falls faster than the car depreciates, so you build positive equity early. With a long term and little money down, the balance falls slowly while depreciation races ahead - leaving you underwater for a large chunk of the loan. On a 72- or 84-month loan it is common to owe more than the car is worth for the first three to four years. That matters the day you want to sell, trade in, or if the car is totaled and the insurance payout is less than your loan balance. The amortization schedule in this tool shows how quickly the balance drops; pairing it with a realistic depreciation curve tells you roughly when you cross into positive equity. The single most reliable way to shorten that underwater window is a larger down payment combined with the shortest term you can comfortably afford.

Refinancing an existing car loan

If you financed at a high APR - for example, because your credit was thin at the time or you took dealer financing without shopping - refinancing can lower the rate and the payment without changing the car. It usually makes sense when your credit score has improved, market rates have fallen, or you simply did not compare lenders the first time. To estimate the savings, enter your current remaining balance as the vehicle price, set the down payment and trade-in to zero, and plug in the new APR and the term you would refinance into. Compare the new monthly payment and total interest against what you have left on the original loan. Watch two things: extending the term to lower the payment can wipe out the interest savings, and some lenders charge fees or have minimum balances, so refinancing a nearly paid-off loan rarely pays off. For a structured side-by-side of two offers, the Loan Comparison Calculator is a good companion.

How car payments fit your overall budget

A common rule of thumb is to keep total transportation costs - loan payment, insurance, fuel, and maintenance - under about 15% to 20% of your take-home pay, with the loan payment itself ideally below 10% to 15%. The payment this calculator produces is only the financing piece; full-coverage insurance (which lenders require while you owe money on the car), fuel, registration, and routine maintenance can easily add a few hundred dollars a month on top. Lenders also look at your debt-to-income ratio when they approve the loan and set your rate, so a car payment that pushes your total monthly debt too high can both raise your APR and strain the rest of your budget. To check where a new payment leaves you, run the figure through the Debt-to-Income Calculator, and use the Down Payment Calculator to plan how much cash to bring so the monthly number lands in a comfortable range.

Gap insurance and total-loss protection

When you owe more than the car is worth, standard auto insurance only pays out the vehicle's current market value if the car is totaled or stolen - which can leave you owing the difference on a loan for a car you no longer have. Gap insurance (Guaranteed Asset Protection) covers that gap between the insurance payout and your remaining loan balance. It is most valuable in exactly the situations a long, low-down-payment loan creates: the first few years when you are underwater. It is far less useful once you have built equity, so buying it is a calculated bet on how long you expect to be upside down. This calculator does not include gap premiums, dealer-sold warranties, or other add-ons - they are extra monthly or upfront costs - so weigh them separately, and remember you can usually buy gap coverage more cheaply from your own insurer than from the dealer.

Fixed-rate vs. 0% promotional financing

Manufacturer "0% APR" offers are tempting, but they come with trade-offs worth running through this calculator. These deals usually require excellent credit, apply only to specific models, and often force a choice between the 0% rate or a cash rebate - not both. To compare honestly, calculate the loan twice: once at 0% on the full price, and once at the market APR but with the rebate subtracted from the price. Sometimes the rebate plus a normal loan beats the 0% offer, especially on a shorter term where interest is modest anyway. Promotional rates also tend to come with shorter maximum terms, which raises the monthly payment even though you pay no interest. The point of modeling both is to make sure "0%" is genuinely cheaper for your situation rather than just the louder headline.

Key terms explained

• Principal: the amount you actually borrow (the amount financed), before any interest is added.
• APR: the annual percentage rate - the interest rate plus certain financing charges, expressed as a yearly figure. It's the best apples-to-apples number for comparing loan offers.
• Term: how long you have to repay the loan, in months. A longer term lowers the payment but raises total interest.
• Amortization: the process of paying down the loan over time. Early payments are mostly interest; later payments are mostly principal.
• Negative equity (upside down): owing more than the car is worth, common early in long, low-down-payment loans.
• Out-the-door price: the total a dealer charges including the vehicle, tax and fees - the number you should negotiate, rather than the monthly payment.

Limitations and assumptions

This is an estimating tool, not a loan offer. It assumes a fixed APR for the entire term and a standard amortizing loan with equal monthly payments. It does not model variable rates, balloon payments, manufacturer 0% promotions tied to a higher price, dealer documentation fees, title and registration, gap insurance, or extended warranties. Sales tax handling varies by state - some tax the full price, some credit your trade-in against the taxable amount - so treat the tax line as an approximation and confirm your local rules. Your real payment will also depend on the exact APR a lender approves you for, which is driven largely by your credit.

How it compares to related calculators

This page answers "what will my monthly payment be on this car?" If your question is slightly different, a sister tool fits better:

• To find the most car you can afford from your income and budget, use the Car Affordability Calculator.
• To dig into the loan with extra inputs and rate comparisons, use the Auto Loan Calculator.
• To weigh financing against signing a lease, use the Car Lease Calculator.
• To plan how much cash to put down and when you'll have it saved, use the Down Payment Calculator.
• To compare two different loan offers side by side, use the Loan Comparison Calculator.
• For any generic fixed-rate installment loan, the all-purpose Loan Calculator handles it.

Sources

• Consumer Financial Protection Bureau - Auto loans: how to shop for and understand the terms
• Consumer Financial Protection Bureau - Interest rate vs. APR
• Federal Trade Commission - Financing or leasing a car