Quick answer
An auto loan calculator includes the whole transaction — price, down payment, trade-in, sales tax and fees — not just the sticker. A $35,000 car with a $6,000 trade-in and $4,000 down leaves $27,030 to finance after 7% sales tax; at 7.9% over 60 months that is $546.78 a month and $5,777 of interest. Term length is where car loans get expensive.
How the Auto Loan Calculator works, step by step
Enter the vehicle price, your down payment and trade-in value, the sales tax rate for your state, then the loan rate and term. The calculator nets the trade-in and deposit against the price, adds tax on the taxable amount, and amortises the financed amount — then compares 36, 48, 60 and 72 months side by side so the term trade-off is visible.
Tax treatment of a trade-in varies by state: most states tax only the difference between the new car's price and the trade-in value, which can make a trade-in worth more than its cash value. Selling privately usually fetches more but gives up that tax offset where it exists — in the example the trade-in saves $420 of sales tax, which is real money on top of the $6,000 value.
Judge the deal on total cost and term, not the monthly payment the dealer quotes. Payments can be lowered by stretching the term to 72 or 84 months, which raises interest and leaves the loan underwater — owing more than the car's value — for years, because cars depreciate faster than long loans amortise. After three years of the example's 60-month loan you still owe $12,102.
The rate you get depends mostly on credit score and whether the car is new or used. Experian's second-quarter 2026 data put the average new-car loan at 6.35% and the average used-car loan at 11.19%, with super-prime borrowers near 4.41% on new cars and deep-subprime borrowers at 16.11%. The same $27,030 over 60 months costs about $3,100 of interest at 4.41% and about $12,500 at 16.11%.
Check the total cost line, not just the payment: the calculator adds the down payment and trade-in to every monthly payment. In the example the total cost is $42,807 — the $35,000 car plus $2,030 of tax plus $5,777 of interest — before insurance, fuel and maintenance. That is the number to compare against keeping your current car for another year.
The formula
Amount financed = Price + sales tax − down payment − trade-in value, where sales tax = (price − trade-in) × tax rate in most states. Monthly payment = Amount × [r(1 + r)^n] ÷ [(1 + r)^n − 1], r = annual rate ÷ 12, n = months. Total cost = down payment + trade-in + (payment × n).
Worked example — try it on the calculator above
Worked example: $35,000 car, $6,000 trade-in, 60 months at 7.9%
Taxable amount: $35,000 − $6,000 = $29,000. Sales tax at 7%: $2,030. Amount financed: $35,000 − $6,000 + $2,030 − $4,000 = $27,030. Payment: $546.78 a month. Total paid over 60 months: $32,806.69, so interest is $5,776.69. Stretch the same loan to 84 months and the payment falls to $419.95 — but interest climbs to $8,246, and after three years you still owe about $17,235 on a car that may well have depreciated below that figure.
Frequently Asked Questions
How long a term should I choose for a car loan?
60 months is a sound ceiling for a new car and 36 to 48 for a used one; the loan should end well before the car's reliable life does. Terms of 72 to 84 months are now common, but they combine higher total interest with years of negative equity — a real problem if the car is written off, since insurance pays market value, not the loan balance.
What rate can I expect on an auto loan?
It depends mainly on credit score and whether the car is new or used. Experian's Q2 2026 averages were 6.35% for new cars and 11.19% for used cars across all borrowers, with super-prime borrowers at 4.41% and 6.29% and deep-subprime borrowers at 16.11% and 21.62%. Manufacturer promotional rates (0% to 2.9%) can beat the market but usually replace a cash rebate — compare the total cost of both offers.
Should I get pre-approved before visiting a dealer?
Yes. A pre-approval from your bank or credit union sets a rate ceiling, turns the dealer conversation into a negotiation about price, and prevents the finance office from marking up the rate — dealers may legally add to the buy rate a lender quotes. Finance through the dealer only if they beat your pre-approved rate in writing.
How much should I put down on a car?
Around 20% on a new car and 10% on a used one is the traditional guidance, mainly to stay ahead of depreciation and avoid negative equity. It also lowers the payment and total interest. If the choice is between a larger deposit and keeping your emergency fund intact, keep the fund — a car loan at 7% is cheaper than an emergency on a credit card at 22%.
Estimates, not advice. This calculator provides educational estimates based on the inputs you enter and the assumptions shown on this page. It is not financial, tax or investment advice, and it cannot see your full situation. Verify important figures against official sources, and consider a qualified professional for decisions about your own money. See our Disclaimer and Methodology.