How to use this calculator
- Vehicle price. The agreed price of the car before tax.
- Down payment. The cash you pay up front.
- Trade-in value. What the seller gives you for your old vehicle. Enter 0 if you have none.
- Sales tax %. The sales tax rate where you buy or register the car.
- Interest rate. The yearly rate on the loan.
- Term. The length of the loan in months.
The results show your monthly payment, the amount financed, the sales tax in dollars, total interest and total cost. Total cost is everything you pay for the car: the down payment, the trade-in value and all loan payments.
Worked example
These are the starting values in the calculator above and the results they give. Change any input to see your own numbers.
- Vehicle price
- $35,000
- Down payment
- $5,000
- Trade-in value
- $0
- Sales tax
- 6%
- Interest rate
- 7%
- Loan term
- 60 months
- Monthly payment
- $635.62
- Amount financed
- $32,100
- Sales tax
- $2,100
- Total interest
- $6,037
- Total cost of the car
- $43,137
How a car payment is calculated
The calculator works in three steps.
- Sales tax. Tax is applied to the vehicle price minus the trade-in value. On a $30,000 car with a $5,000 trade-in and a 6% rate, tax is charged on $25,000, which comes to $1,500.
- Amount financed. This is the price, minus the down payment, minus the trade-in, plus the sales tax. With $3,000 down in the example above, the amount financed is $23,500.
- Monthly payment. The amount financed, the monthly rate and the number of months go into the standard loan payment formula.
Tax rules vary by place. Some areas tax the full price and give no credit for a trade-in. If that applies to you, the real tax will be higher than the figure shown here. The calculator also leaves out registration, title and dealer fees.
M = A × r × (1 + r)^n ÷ ((1 + r)^n − 1), where A = price − down payment − trade-in + (price − trade-in) × tax rate- M
- monthly payment
- A
- amount financed
- r
- monthly interest rate (yearly rate ÷ 12)
- n
- loan term in months
What changes your payment
- Down payment and trade-in. Both reduce the amount you borrow, which lowers the payment and the interest.
- Term. A longer term gives a lower monthly payment but more total interest. Cars also lose value over time, so a long loan can leave you owing more than the car is worth for a while.
- Interest rate. A lower rate reduces both the payment and the total interest.
- Sales tax. Because the tax is added to the loan here, you pay interest on it too.
When comparing offers, look at total cost and not only the monthly payment. A low payment spread over many months can cost more overall. To compare offers that include fees, use the APR calculator. To see how a car payment fits with your other bills, check your debt-to-income ratio.
Frequently asked questions
How is a monthly car payment calculated?
Start with the vehicle price. Subtract the down payment and trade-in value, then add sales tax to get the amount financed. That amount, the monthly interest rate and the number of months go into the standard loan payment formula. The result is a fixed payment that clears the loan by the end of the term.
Does a trade-in lower the sales tax on a car?
In many places it does. The tax is charged on the price of the new vehicle minus the trade-in value, which is how this calculator works. Some places tax the full price instead and give no trade-in credit. Check the rule where you will register the car, because it changes both the tax and the amount financed.
Is a longer car loan a good idea?
A longer loan lowers the monthly payment, which can make a car easier to fit into a budget. The cost is more total interest, because you owe money for more months. A car also loses value as it ages, so with a long loan the balance may stay above the car's value for longer. Compare terms using total cost.
How much should I put down on a car?
There is no single right amount. A larger down payment reduces the amount financed, the monthly payment and the total interest. It also lowers the chance of owing more than the car is worth. A smaller down payment keeps more cash on hand. Enter different amounts to see how each one changes your payment and cost.
What is the amount financed on a car loan?
The amount financed is the sum you actually borrow. In this calculator it is the vehicle price, minus your down payment and trade-in value, plus sales tax. Interest is charged on this figure. Real loans may also add registration, title or dealer fees to the amount financed, which would raise the payment slightly.
This calculator gives estimates for education only. It does not know your full situation and is not financial advice. Reviewed and updated November 15, 2026.