🚗 Auto Loan Calculator
Estimate your car payment with tax and trade-in, then see how long each term leaves you underwater. Compare 36 to 84 months. Free, no signup.
What Auto Loan Calculator Does
A car is a depreciating asset bought with an amortizing loan, and those two curves move at different speeds. The loan balance falls slowly at first because early payments are mostly interest. The car's value falls fastest at the very beginning — roughly 10% the moment it leaves the lot, and about 20% over the first year.
When the balance is above the value, you have negative equity: selling the car would not clear the loan. That is not an edge case. With no money down on a $35,000 car at 7%, a 60-month loan stays underwater for 18 months and an 84-month loan for 48 — more than half the term.
This auto loan calculator returns the monthly payment, sales tax, total interest and total cost, and it models three things most calculators leave out: whether your state gives a sales-tax credit for the trade-in, a balance still owed on the car you are trading in, and what an extra payment each month does to the term. Enter a monthly budget and it runs the arithmetic backwards to the vehicle price that budget actually reaches.
Use the term comparison below before you accept a long loan to hit a monthly payment target: the payment falls, but the interest and the time spent underwater both rise sharply.
How to Use Auto Loan Calculator
- Enter the sticker price of the vehicle
- Input your cash down payment, trade-in allowance, and anything still owed on the trade-in
- Enter your annual loan interest rate (APR) and local sales tax rate
- Select a loan term (36, 48, 60, 72, or 84 months)
- Choose whether your state taxes the price after the trade-in credit or the full price
- Add an extra monthly payment, or a monthly budget to see the price it reaches
- View your estimated monthly payment, total interest, and what each choice costs
Formula Used by Auto Loan Calculator
Monthly payment
M = L × [ r(1 + r)^n ] ÷ [ (1 + r)^n − 1 ]
- L
- Amount financed: price + sales tax + fees − down payment − net trade-in
- r
- Monthly rate: APR ÷ 12
- n
- Term in months
Worked example
A $35,000 car, $3,500 down (10%), 7% APR, 60 months, ignoring tax and fees.
- L = 35,000 − 3,500 = 31,500
- r = 0.07 ÷ 12 = 0.00583333, n = 60
- (1.00583333)^60 = 1.41763
- M = 31,500 × (0.00583333 × 1.41763) ÷ (1.41763 − 1)
Result: M = $623.74 per month, and $5,924 of total interest over five years.
Negative equity
equity = market_value − loan_balance
- market_value
- What the car would actually sell for today, not what you paid
- loan_balance
- Outstanding principal — always higher than a simple "payments remaining × payment" estimate would suggest early on
Worked example
A $35,000 car bought with nothing down at 7% over 84 months.
- Balance after 1 month: $34,676
- Market value after 1 month: ~$31,208 (off-the-lot drop already taken)
- Equity: 31,208 − 34,676 = −3,468
Result: About $3,470 underwater in month one, and the gap does not close until month 48.
What the Term Length Actually Costs — $35,000 at 7%, Nothing Down
The monthly payment is the number dealerships negotiate on. These are the numbers that decide what the car costs you.
| Term | Monthly payment | Total interest | Months underwater |
|---|---|---|---|
| 36 months | $1,080.70 | $3,905 | 6 |
| 48 months | $838.12 | $5,230 | 10 |
| 60 months | $693.04 | $6,583 | 18 |
| 72 months | $596.72 | $7,963 | 32 |
| 84 months | $528.24 | $9,372 | 48 |
How Long You Stay Underwater
Months until the loan balance drops below the car's market value, by term and down payment. Around 10% down covers the off-the-lot drop, which is why it is the conventional minimum.
| Down payment | 36 mo | 48 mo | 60 mo | 72 mo | 84 mo |
|---|---|---|---|---|---|
| 0% | 6 | 10 | 18 | 32 | 48 |
| 5% | 4 | 6 | 10 | 23 | 42 |
| 10% | 1 | 1 | 1 | 1 | 1 |
| 20% | 1 | 1 | 1 | 1 | 1 |
0% APR or the Cash Rebate? — $35,000 Car, 60 Months
Manufacturers usually offer one or the other, never both. The rebate looks like the obvious win because it is money now, and on a five-year loan it usually is not: 0% financing removes the entire interest bill, which is far larger than the rebate. Column three is the rebate that would be needed to break even.
| Outside rate you would pay | Cost with 0% APR | Rebate needed to match 0% | A typical $3,000 rebate leaves you |
|---|---|---|---|
| 5.9% APR | $35,000 | $4,754 | $2,030 worse off |
| 7.0% APR | $35,000 | $5,540 | $3,018 worse off |
Does Your State Tax the Price After the Trade-in? — $35,000 Car, $2,000 Trade-in
This is the one input every auto loan calculator hardcodes and never tells you about. The rule is set by the state, and on a large trade-in it is worth far more than the rate you negotiate. Verified from the tax authorities themselves, not from a summary.
| Rule | Taxable amount at 6% | Sales tax | Example authority |
|---|---|---|---|
| Tax the price minus the trade-in allowance | $33,000 | $1,980 | Texas: "6.25 percent of sales price, minus any trade-in allowance" |
| Tax the full selling price | $35,000 | $2,100 | California and Virginia (see sources) |
What an Extra Payment Does — $29,980 Financed at 5.9% Over 60 Months
Scheduled payment is $578.20 and scheduled interest is $4,712. Extra money applied to principal shortens the term; it does not reduce the payment.
| Extra per month | Loan clears in | Months saved | Interest saved |
|---|---|---|---|
| $50 | 55 months | 5 | $441 |
| $100 | 50 months | 10 | $806 |
| $200 | 43 months | 17 | $1,372 |
Typical Depreciation on a New Car
Approximate share of the original price retained. Depreciation varies enormously by make, model, mileage and condition — treat this as a planning estimate, not a valuation.
| Age | Share of original value | On a $35,000 car |
|---|---|---|
| Driven off the lot | ~90% | $31,500 |
| 1 year | ~80% | $28,000 |
| 2 years | ~68% | $23,800 |
| 3 years | ~58% | $20,200 |
| 5 years | ~42% | $14,600 |
| 7 years | ~30% | $10,600 |
How to Read Your Result
The 84-month loan is the trap
Stretching from 60 to 84 months drops the payment from $693 to $528 — about $165 a month, which is exactly how it gets sold. It also adds $2,789 in interest and keeps you underwater for 48 months instead of 18. Most people do not keep a car seven years, so the likely outcome is trading in while still owing more than it is worth, and rolling that deficit into the next loan.
Rolling negative equity forward
When a trade-in is worth less than the loan against it, dealers will happily add the shortfall to the new loan. You then finance part of a car you no longer own, on top of a new car that is itself depreciating. This compounds across purchases and is the main mechanism by which people end up with payments far larger than the vehicle justifies.
Why 10% down is the usual advice
It is not arbitrary. A roughly 10% down payment offsets the immediate off-the-lot depreciation, so you start at or near break-even instead of instantly underwater. 20% down gives real headroom against an early total loss or an unexpected sale.
Take the 0% or take the rebate?
Run both, because the intuition is usually backwards. On a $35,000 car over 60 months, 0% financing costs exactly $35,000. Taking a $3,000 rebate instead and financing $32,000 at 7% costs $38,018 — the rebate is worth $3,000 and the interest it exposes you to is worth $6,018. The rebate would have to reach $5,540 to break even at that rate, or $4,754 at 5.9%. Two things flip it: a much shorter term, which leaves less interest to avoid, and a rate well below the market one. Note also that a manufacturer rebate assigned to the dealer is itself taxable in some states — California says so explicitly.
A trade-in is worth more than its allowance in most of the country
If your state taxes only the difference between the price and the trade-in allowance, the trade-in saves you the tax on its own value as well as reducing the loan. A $2,000 trade-in at a 6% rate is worth $2,120, not $2,000. On a $15,000 trade-in that gap is $900. This is also why a private sale is not automatically better than a trade-in: a private buyer might pay several hundred more, and you lose the tax credit by selling that way. Where the state taxes the full price — California and Virginia both do — none of this applies and the comparison is straightforward.
Extra payments only work if you say what they are for
An extra $100 a month on a $29,980 loan at 5.9% clears it in 50 months instead of 60 and saves $806 in interest — but only if the lender applies it to principal. Sent without instruction, many servicers treat extra money as the next payment made early, which changes the due date and saves nothing at all. Say "apply to principal" in writing, then check the next statement: the balance should have dropped by the full extra amount, and the due date should not have moved.
Daily simple interest is a different loan from the one this models
This calculator, like the payment on your contract, assumes interest accrues once per period. A large share of auto loans are written as daily simple interest instead, where interest accrues every day on the outstanding balance. The scheduled payment is identical, but paying late costs more than the late fee: on a $29,980 balance at 5.9%, each day costs $4.85, so a payment ten days late sends $48 less to principal than the schedule assumed. Paid consistently late, the loan does not clear at the final payment and ends with a balloon. Paid early, the same mechanism works in your favor. Check the contract for the phrase — it is the difference between the schedule being a prediction and being a promise.
Gap insurance exists because of this
If the car is totalled or stolen while you are underwater, standard insurance pays the market value — not the loan balance — and you owe the difference. Gap coverage pays that shortfall. It is worth buying exactly when the tables above say you are underwater, and worth canceling once you are not.
Limitations & Accuracy Notes
- The depreciation figures are typical-case estimates. Actual resale value depends on make, model, trim, mileage, condition, color and local market, and some models hold value far better than these numbers suggest. Check a real valuation guide before acting on the equity timeline.
- The calculation covers price, sales tax and financing. It excludes registration, title, documentation, destination and dealer add-on fees, which commonly add several hundred to a few thousand dollars.
- The trade-in tax credit is a setting here, not an assumption, because the rule is set by your state and the two answers differ by the trade-in value times your tax rate. Texas taxes the price minus the trade-in allowance; California and Virginia tax the full price. Several states cap the credit at a dollar amount that changes annually — check your own revenue department rather than trusting any calculator, including this one.
- Rebate treatment also varies. California, for example, taxes a manufacturer rebate that the customer assigns to the dealer, so a rebate does not always reduce the taxable amount.
- Running costs are excluded entirely: insurance, fuel, maintenance, tyres and repairs typically exceed the loan payment over the life of ownership.
- A promotional 0% APR from a manufacturer often replaces a cash rebate. Compare the total cost of each rather than assuming 0% is automatically cheaper.
- This is arithmetic, not financial advice, and it does not account for your circumstances or credit profile.
Frequently Asked Questions
How is monthly auto loan payment calculated?
How much down payment should I make on a car?
What is a good auto loan term length?
Why is the dealer's monthly payment lower than this one?
What is negative equity and how does it happen?
Should I take the manufacturer rebate or the 0% financing?
Does a trade-in reduce the sales tax on the new car?
How much car can I afford on a set monthly budget?
How much do extra payments actually save on a car loan?
What is a daily simple interest auto loan?
Does a bigger down payment reduce the interest rate?
Is the payment shown the full amount I will pay monthly?
Is my financial data stored?
References & Further Reading
- Federal Reserve — Consumer Credit (G.19) — Official series for average US new and used car loan rates and terms
- eCFR — 12 CFR Part 1026 (Regulation Z, Truth in Lending) — Governs how APR and finance charges must be disclosed on a vehicle loan
- Texas Comptroller — Motor Vehicle Sales and Use Tax — States the rate as "6.25 percent of sales price, minus any trade-in allowance" — a state that gives the trade-in credit
- CDTFA — Tax Guide for Motor Vehicle Dealers, Industry Topics — California: "If you accept a trade-in on the sale of a vehicle, you must still report the total selling price" — worked as a $20,000 sale with a $4,000 trade-in taxed on $20,000
- Code of Virginia § 58.1-2405 — Basis of tax — "In no case shall such lesser price include credits for trade-in or any other transaction of such nature"