Auto Loan Calculator
Estimate monthly car payments and total cost of financing a vehicle.
About the Auto Loan Calculator
An auto loan is an amortizing installment loan secured by the vehicle itself - which means if you stop paying, the lender can repossess the car. The arithmetic is identical to any other installment loan: same three inputs (principal, annual rate, term in years), same level-payment formula. What makes auto loans different from personal loans is the trade-in credit, the state-by-state variation in sales-tax treatment, and the fact that auto loans are now the longest-tenor consumer credit product in the United States, with terms reaching 84 months for new vehicles per Experian's State of the Automotive Finance Market (Q4 2023).
The default example - a $32,000 vehicle with $4,000 down and a $6,000 trade-in, financed at 7.2% APR for 6 years - gives a $22,000 loan amount and a $376.78 monthly payment. Total interest over six years is $4,926.56, bringing the total cost of the vehicle (loan payments plus down payment plus trade-in) to $36,926.56 - about $4,927 more than the sticker price, all of it interest. The trade-in effectively acts as a second down payment, shrinking both the loan size and the lifetime interest cost.
Trade-in tax credit is a subtlety this calculator does not model. In most US states (about 42 of 50 plus DC), sales tax is computed on the difference between vehicle price and trade-in value - so trading in a $6,000 car on a $32,000 purchase in a 7% sales-tax state saves $420 in tax. California, Hawaii, Michigan, and Virginia are among the exceptions that tax the full purchase price. Edmunds and Kelley Blue Book maintain current lists of state trade-in tax rules; budget an extra few hundred dollars in those four states.
Long auto-loan terms (72-84 months) became common after 2020 as new-vehicle transaction prices climbed past $47,000 (Kelley Blue Book, Dec 2023). The average new-vehicle loan term is now 69 months and the average monthly payment is $737, per Experian's Q4 2023 data. Longer terms reduce the monthly payment but increase total interest dramatically: a $25,000 loan at 7.2% over 84 months costs $6,738 in interest, versus $4,788 over 60 months - $1,950 more for a $101 lower monthly payment.
How It Works
The auto loan calculator computes the loan amount after down payment and trade-in, then applies standard amortization to derive the monthly payment:
Loan amount = vehicle_price - down_payment - trade_in
Monthly payment M = (P x r) / (1 - (1+r)^(-n))
where:
P = loan amount
r = monthly rate = annual_rate / 12
n = total number of payments = years x 12
Total of payments = M x n
Total interest = Total of payments - Loan amount
Total cost = Total of payments + down_payment + trade_inFor the default $32,000 vehicle with $4,000 down and $6,000 trade-in: loan amount = 32,000 - 4,000 - 6,000 = $22,000. At 7.2% APR for 6 years (72 months): r = 0.072/12 = 0.006, n = 72, M = (22,000 x 0.006) / (1 - 1.006^(-72)) = 132 / 0.35047 = $376.78.
Total of payments: $376.78 x 72 = $27,128.16. Total interest: $27,128.16 - $22,000 = $5,128.16. Adding the down payment and trade-in back, the total cost of the vehicle is $27,128.16 + $4,000 + $6,000 = $37,128.16 - about $5,128 more than the sticker price, all of it interest. When the trade-in is worth more than the down payment, the trade-in is doing more work than the cash down.
For an 84-month loan on the same $22,000 at 7.2%: n = 84, M = (22,000 x 0.006) / (1 - 1.006^(-84)) = 132 / 0.3956 = $333.66. Monthly payment drops by about $43, but total interest rises to $28,027.44 - $22,000 = $6,027.44 - $899 more than the 72-month option, in exchange for $43/month of breathing room.
Worked Examples
Default example: $32,000 vehicle, $4,000 down, $6,000 trade-in, 7.2% APR, 6-year term. Loan = $22,000. Monthly payment = (22,000 x 0.006) / (1 - 1.006^(-72)) = $376.78. Total interest = $5,128.16. Total cost = $37,128.16.
Stretch the term to 7 years (84 months) and the payment drops to $333.66 - a $43 monthly saving. But total interest rises to $6,027.44, adding $899 to the cost of the vehicle. Over 84 months the borrower pays roughly 27% of the loan amount in interest, versus 23% over 72 months - a meaningful trade-off when monthly cash flow is tight but a meaningful cost when it is not.
Negative-equity rollover: if the trade-in is worth $6,000 but the borrower still owes $8,000 on the prior loan, the net trade-in contribution is -$2,000. Loan amount becomes 32,000 - 4,000 - (-2,000) = $30,000 (enter -2000 in the trade-in field to model this). At 7.2% for 72 months the payment jumps to $513.34 - $136 more than the positive-equity case, with $6,960 of total interest. Rolling negative equity into a new loan is the leading driver of 84-month terms, per Experian's State of the Automotive Finance Market.
When to Use This Tool
Use the auto loan calculator when you need to:
- Compare financing offers from a bank, a credit union, and the dealership's captive finance company (e.g., Ford Credit, Toyota Financial Services).
- Decide between a 48, 60, 72, or 84-month term by weighing the monthly payment against total interest paid.
- Estimate the impact of trading in a vehicle with positive or negative equity (rolling over an underwater prior loan).
- Project the effect of a larger down payment on monthly cash flow and total interest.
- Model the cost of dealer add-ons (extended warranty, GAP insurance, paint and fabric protection) rolled into the financed amount.
- Decide between a 0% APR manufacturer incentive and a cash rebate combined with a bank or credit-union loan.
- Verify the dealer's payment quote against a pre-approval from your bank or credit union before signing the retail installment contract.
Limitations & Disclaimer
This calculator uses standard amortization. It does not model trade-in tax credits (which vary by state - see Edmunds for current rules), dealer add-ons, GAP insurance, negative-equity rollover beyond what you enter as a negative trade-in, precomputed interest, lease money factors, or sales tax. Loan terms and APRs vary by lender, credit profile, vehicle age, and LTV. This tool is not financial, lending, or auto-purchasing advice. See our disclaimer for full terms.
Frequently Asked Questions
Should I take the dealer's 0% APR or the cash rebate?
Compare the total cost. A $30,000 car with a $1,500 rebate and 6.5% bank financing for 60 months costs $33,008 total. The 0% APR offer (no rebate) costs $30,000 - a $3,008 saving. The break-even rebate is roughly <code>price x rate x years / 2 = 30,000 x 0.065 x 5 / 2 = $4,875</code>. If the rebate exceeds $4,875, take the rebate and bank financing; otherwise take the 0% APR. Run both scenarios through this calculator with the rebate entered as a down payment.
What is GAP insurance and do I need it?
GAP (Guaranteed Asset Protection) insurance covers the difference between the loan balance and the vehicle's actual cash value if the car is totaled or stolen. Because vehicles depreciate about 20% in the first year (Edmunds and KBB data) but loan balances decline slowly on long terms, borrowers can be underwater. GAP typically costs $400-$700 from the dealer or $20-$40/year from your auto insurer, and is worth it for loans over 60 months with less than 20% down.
How do dealer add-ons affect my loan?
Extended warranties, GAP insurance, paint protection, and theft etching are typically rolled into the loan amount. A $30,000 car with $2,500 of add-ons becomes a $32,500 loan - which at 6.5% for 60 months adds $51 to the monthly payment and $562 to total interest. The CFPB has flagged dealer markup on these products and advises negotiating each item separately rather than financing it without thought.
What is negative equity or rollover?
If you owe more on your current car than it is worth, the difference is rolled into the new loan. A $6,000 trade-in with $8,000 owed means -$2,000 of equity. The new loan includes the negative equity plus the new vehicle's price minus any down payment. Negative equity is the leading contributor to the rise in 72-84 month auto loans, per Experian's State of the Automotive Finance Market reports.
Is leasing cheaper than buying?
Leasing usually has lower monthly payments but builds no equity. A $30,000 lease over 36 months at $400/month costs $14,400 in payments with no asset at the end. A $30,000 purchase at 6.5% for 60 months costs $23,485 in payments, but you own a vehicle worth roughly $12,000-$15,000 at the end (per KBB depreciation curves). Compare total cost of ownership, not monthly payment. The FTC's Buyer's Guide (16 CFR §455) requires lessors to disclose residual value and money factor.
How do I handle sales tax on the trade-in?
Most US states (about 42) compute sales tax on the price-minus-trade-in difference. A $32,000 car with a $6,000 trade-in in a 7% state is taxed on $26,000 - a $1,820 tax bill versus $2,240 without the trade-in, saving $420. This calculator does not model trade-in tax credit; check Edmunds or your state's department of revenue for current rules. Exceptions include California, Hawaii, Michigan, Virginia, and DC.
What is a precomputed auto loan?
Some subprime auto lenders (particularly buy-here-pay-here dealers) use precomputed interest: the full interest is calculated at origination and added to the principal. The total of payments is fixed regardless of early payoff, subject to a Rule of 78s refund that front-loads the lender's interest. The FTC Used Car Rule (16 CFR §455) requires disclosure. Conventional amortizing loans - the default in this calculator - are the standard for bank and credit-union auto financing.
Last updated: September 9, 2026 · Author: HT99 Tools Editorial Team