Auto Loan Calculator
Calculate your monthly car payment including sales tax, down payment, and trade-in value. See total interest and total cost of ownership. See also Loan Calculator and Car Loan EMI Calculator.
How to Calculate Auto Loan Payments
To calculate your auto loan payment, start with the vehicle price and add sales tax. Subtract your down payment and trade-in value to get the loan amount. Then apply the standard loan payment formula using the interest rate and loan term. Most auto loans are simple amortizing loans with fixed monthly payments. The loan term typically ranges from 36 to 84 months, with shorter terms resulting in higher payments but less total interest.
Auto Loan Payment Formula
Loan Amount = (Vehicle Price + Sales Tax) − Down Payment − Trade-In
EMI = P × r × (1 + r)^n / ((1 + r)^n − 1)
Where:
P = Loan amount
r = Monthly interest rate (APR / 12 / 100)
n = Loan term in months
Example
Vehicle: $30,000, Down: $5,000, Trade-In: $0, Tax: 7%
Sales Tax = $30,000 × 0.07 = $2,100
Loan Amount = $30,000 + $2,100 − $5,000 = $27,100
Rate: 5.5% APR, Term: 60 months
r = 5.5 / 12 / 100 = 0.004583
Monthly Payment = $518.17
Total Interest = $3,990.20
Total Cost = $30,000 + $2,100 + $3,990.20 = $36,090.20
Auto Loan Comparison Table
| Vehicle Price | Down | Rate | Term | Monthly | Total Interest |
|---|---|---|---|---|---|
| $20,000 | $3,000 | 5% | 48 mo | $391.43 | $1,788.64 |
| $25,000 | $5,000 | 5.5% | 60 mo | $382.02 | $2,921.20 |
| $30,000 | $5,000 | 6% | 60 mo | $483.32 | $3,999.20 |
| $35,000 | $7,000 | 5% | 72 mo | $452.44 | $4,575.68 |
| $40,000 | $10,000 | 4.5% | 60 mo | $559.58 | $3,574.80 |
| $50,000 | $10,000 | 6% | 72 mo | $664.81 | $7,866.32 |
Frequently Asked Questions
What is a good interest rate for an auto loan?
As of 2024, good rates for new cars range from 4% to 7% depending on credit score. Excellent credit (750+) can qualify for rates under 5%. Used car rates are typically 1-2% higher. Credit union rates are often lower than bank or dealer financing.
Should I choose a longer loan term for lower payments?
Longer terms (72-84 months) lower monthly payments but significantly increase total interest. A $30,000 loan at 6% costs $3,999 in interest over 60 months but $5,797 over 72 months. Longer terms also risk being "upside down" (owing more than the car is worth).
How much should I put down on a car?
Financial experts recommend at least 20% down on a new car and 10% on a used car. A larger down payment reduces the loan amount, lowers monthly payments, reduces total interest, and helps avoid negative equity.
Is sales tax included in the loan?
It depends on the state and lender. Some states require sales tax to be paid upfront, while others allow it to be rolled into the loan. This calculator includes sales tax in the loan amount by default, which is the most common scenario.
Solved Examples
Example 1: Monthly payment on a $28,000 auto loan
Solution:
Vehicle price = $35,000, Down payment = $7,000, Loan = $28,000
Rate = 5.9%, Term = 60 months
Monthly rate = 5.9% / 12 = 0.4917% = 0.004917
EMI = $28,000 × 0.004917 × (1.004917)^60 / [(1.004917)^60 - 1]
EMI = $541.14
Total paid = $541.14 × 60 = $32,468
Total interest = $32,468 - $28,000 = $4,468
Answer: Monthly payment = $541.14, total interest = $4,468 over 5 years.
Example 2: 48-month vs 72-month auto loan comparison
Solution:
Loan = $25,000, Rate = 6.5%
48 months: EMI = $593, Total interest = $3,464
72 months: EMI = $424, Total interest = $5,528
Monthly savings with 72-mo = $169 less per month
Extra interest cost = $5,528 - $3,464 = $2,064 more
Answer: The 72-month loan saves $169/month but costs $2,064 more in total interest.
Example 3: Total cost of ownership with depreciation
Solution:
New car = $40,000, Down payment = $8,000, Loan = $32,000 at 6% for 5 years
Monthly payment = $618.65, Total interest = $5,119
Car value after 5 years ≈ $16,000 (60% depreciation)
True cost = Down payment + Interest + Depreciation = $8,000 + $5,119 + $24,000 = $37,119
Answer: True 5-year cost of ownership = $37,119 (the car only depreciated, not appreciated).
Practice Questions
Try these on your own:
- $20,000 auto loan at 4.9% for 48 months. Monthly payment? (Answer: $460.28)
- You can afford $400/month. At 5.5% for 60 months, max loan amount? (Answer: ≈$20,890)
- $30,000 car, $5,000 trade-in, $3,000 down. Loan amount? (Answer: $22,000)
- Dealer offers 0% for 36 months OR $3,000 rebate with 5% financing for 36 months on a $25,000 car. Which saves more? (Answer: 0% saves $1,970 total vs rebate option)
- $35,000 loan at 7% for 60 months. How much interest in the first payment? (Answer: $204.17)
Common Mistakes to Avoid
The most expensive mistake is focusing only on the monthly payment and stretching the term to 72-84 months. This leads to being "underwater" (owing more than the car is worth) for years because cars depreciate 20-30% in the first year alone. Another error is not negotiating the vehicle price separately from the financing — dealers often lower the price but make up the difference with a higher rate. Forgetting to include sales tax (6-10%), title, registration, and dealer fees in the total financed amount inflates the actual loan. Many buyers also skip the pre-approval step; getting financing from your bank/credit union before visiting the dealer gives you negotiating leverage and typically better rates. Finally, rolling negative equity from an old car into a new loan is one of the worst financial decisions — you end up paying interest on a car you no longer own.
Key Takeaways
- Keep auto loan terms at 48-60 months maximum to avoid being underwater on the loan.
- Put at least 20% down to reduce interest costs and stay ahead of depreciation.
- Cars lose ~20% value in year 1 and ~60% over 5 years — factor this into total ownership cost.
- Get pre-approved financing before dealership visits for better negotiating power.
- Total vehicle cost = price + tax + fees + interest - trade-in value - down payment rebates.
- A used car (1-3 years old) can save 30-40% vs new while having most of its useful life remaining.