Car Payment Calculator

Follow these steps to calculate your monthly car payment using this tool:

1. Enter the Vehicle Price - Input the total negotiated purchase price of the car. This should be the sticker price or the price you have agreed upon with the dealer before any down payment, trade-in, or tax is applied. For example, enter $35,000 for a mid-range sedan or SUV.
2. Enter Your Down Payment - Input the cash amount you plan to pay upfront. Financial advisors recommend putting at least 20% down on a new car and 10% on a used car to avoid negative equity. If you are putting $5,000 down, enter that amount here.
3. Enter Trade-In Value - If you are trading in your current vehicle, enter its estimated value. You can check Kelley Blue Book, Edmunds, or get a CarMax quote for a realistic estimate. If you are not trading in, leave this at $0.
4. Set the Interest Rate (APR) - Enter the annual percentage rate offered by your lender. If you have not been pre-approved yet, use 6.5% as a reasonable starting point for borrowers with good credit. Adjust up or down based on your credit profile.
5. Select the Loan Term - Choose a term from 12 to 84 months. A 60-month (5-year) term offers the best balance between affordable monthly payments and reasonable total interest for most buyers.
6. Enter Your Sales Tax Rate - Input your state and local combined sales tax rate. The national average is approximately 7%. If you live in a state with no vehicle sales tax (Alaska, Delaware, Montana, New Hampshire, or Oregon), enter 0%.

After entering your inputs, the calculator instantly displays five key results: your monthly payment, total amount financed, total interest paid, total cost of the vehicle, and the sales tax amount.

Tips for lowering your car payment: Increase your down payment, choose a shorter loan term (which reduces total interest even if monthly payments are higher), negotiate a lower vehicle price, improve your credit score before applying, get pre-approved at a credit union, and compare at least three lender offers before signing. Also consider whether a used car might meet your needs at a significantly lower price point.

A car payment calculator is a financial tool that estimates your monthly auto loan payment and total vehicle cost based on the purchase price, down payment, trade-in value, interest rate, loan term, and sales tax rate. It uses the standard loan amortization formula that banks, credit unions, and dealerships rely on to determine fixed monthly payments for vehicle financing.

Buying a car is the second-largest purchase most Americans make after a home. The average new car transaction price in the United States exceeds $48,000, and the average used car price hovers around $27,000. With most buyers financing their vehicles, understanding how each variable affects your monthly payment and total cost is critical to making a smart financial decision.

Unlike a basic auto loan calculator, this car payment calculator includes sales tax in the computation. Sales tax is a frequently overlooked cost that can add thousands of dollars to your total. On a $35,000 vehicle in a state with 7% sales tax, you owe an additional $2,450. When that tax is rolled into your loan (as it commonly is), it increases both your monthly payment and the total interest you pay over the life of the loan.

Several factors determine the interest rate you receive on a car loan. Your credit score is the most influential: borrowers with scores above 750 typically qualify for the lowest rates (4.5% to 6% for new cars as of 2026), while those with scores below 600 may face rates of 13% or more. The loan term also matters. Lenders often charge slightly higher rates for longer terms (72 and 84 months) because the extended repayment period increases their risk. Whether the vehicle is new or used affects pricing too. Used car rates run one to two percentage points higher than new car rates on average because used vehicles depreciate faster and carry more uncertainty for the lender.

When shopping for a car loan, you have three main financing sources. Dealer financing is the most convenient option but may include a rate markup that benefits the dealership. Bank loans offer competitive rates, especially if you have an existing relationship with the institution. Credit union loans frequently provide the lowest rates because credit unions operate as nonprofit cooperatives. Getting pre-approved before visiting the dealership gives you a benchmark rate and stronger negotiating leverage.

The monthly car payment is calculated using the standard loan amortization formula, the same formula used for mortgages and other fixed-rate installment loans:

M = P × [r(1 + r)n] / [(1 + r)n − 1]

Where each variable is defined as follows:

The sales tax is calculated before determining the principal:

Sales Tax = (Vehicle Price − Trade-In Value) × Sales Tax Rate

Many states allow you to deduct the trade-in value before calculating sales tax, which can save you hundreds of dollars. The total amount financed (the principal P) is then:

P = Vehicle Price + Sales Tax − Down Payment − Trade-In Value

Once the monthly payment M is known, the remaining results are straightforward:

Total Interest = (M × n) − P

Total Cost = (M × n) + Down Payment

The amortization formula ensures that each monthly payment is the same dollar amount, but the composition shifts over time. Early payments are interest-heavy because the outstanding balance is at its highest. As the principal decreases, more of each payment goes toward reducing the balance. For a $30,000 loan at 6.5% over 60 months, the first payment includes $163 in interest and $425 in principal, while the final payment includes just $3 in interest and $585 in principal.

Example 1 — New Car at $35,000 with Sales Tax:

• Vehicle price: $35,000
• Down payment: $5,000
• Trade-in value: $0
• Interest rate: 6.5% APR
• Loan term: 60 months
• Sales tax rate: 7%

First, calculate the sales tax: $35,000 × 0.07 = $2,450. The amount financed is $35,000 + $2,450 − $5,000 = $32,450. Using the amortization formula with a monthly rate of 0.005417 and 60 payments:

M = 32,450 × [0.005417 × (1.005417)60] / [(1.005417)60 − 1] ≈ $635

Over 60 months, total payments equal $38,100. Total interest paid is $38,100 − $32,450 = $5,650. Total cost including the down payment is $38,100 + $5,000 = $43,100. This example shows how a 7% sales tax adds nearly $2,500 to the financed amount and over $400 in additional interest over the loan term.

Example 2 — Used Car at $22,000 with Trade-In:

• Vehicle price: $22,000
• Down payment: $3,000
• Trade-in value: $5,000
• Interest rate: 7.5% APR
• Loan term: 48 months
• Sales tax rate: 6%

Sales tax is calculated on the price minus trade-in: ($22,000 − $5,000) × 0.06 = $1,020. Amount financed: $22,000 + $1,020 − $3,000 − $5,000 = $15,020. Monthly payment works out to approximately $363. Total interest over 48 months is about $2,404. Total cost is $17,424 + $3,000 = $20,424. Notice how the trade-in saved $300 in sales tax compared to paying tax on the full $22,000 price.

Example 3 — Comparing 48-Month vs. 72-Month Terms:

To illustrate how loan term affects total cost, consider a $30,000 vehicle with a $5,000 down payment, no trade-in, 6.5% APR, and 7% sales tax. The amount financed is $30,000 + $2,100 − $5,000 = $27,100.

The 72-month term saves $190 per month but costs an extra $1,752 in total interest. Worse, at the 48-month mark, the 72-month borrower still owes roughly $9,200 on a car that may have depreciated to $12,000–$14,000, leaving very little equity cushion. This is why most financial planners recommend keeping your car loan to 60 months or less.