Work out your monthly car payment, trade-in values, sales taxes, and total interest for any auto loan. Compare dealership financing options, interest rates, and loan terms to stay within your auto buying budget.
Financing a vehicle requires understanding how the purchase price, interest rate, down payment, trade-in value, and sales tax interact to determine your monthly payment. Our free online Auto Loan Calculator lets you estimate your monthly car payment and the total cost of ownership before visiting the dealership.
The auto loan payment is calculated by subtracting the down payment and trade-in value from the vehicle price, adding sales tax and fees, and then applying the amortization formula over the loan term (usually expressed in months like 36, 48, 60, or 72). This helps you stay within your budget and negotiate terms.
A shorter loan term (e.g., 36 to 60 months) is generally recommended because it reduces the total interest you pay and keeps you from being 'underwater' (owing more than the car is worth). Term lengths of 72 or 84 months have lower monthly payments but cost much more in interest.
The value of your trade-in vehicle acts like a down payment. It is subtracted from the vehicle purchase price, reducing the amount you need to borrow, which lowers both your monthly payments and the total interest you pay over the loan term.
Paying sales tax and registration fees upfront is generally better. Rolling them into the loan increases the loan amount, meaning you will pay interest on those taxes and fees for the life of the loan.
GAP (Guaranteed Asset Protection) insurance covers the difference between the actual cash value of your car (what auto insurance pays if it is totaled) and the remaining balance on your auto loan. It is recommended if you have a low down payment or a long loan term.