Calculate your auto loan monthly payment including down payment, trade-in, sales tax, dealer fees, and full amortization.
Models the full out-the-door price: vehicle minus trade-in (tax-exempt in most US states) plus sales tax plus fees, minus down payment, financed at your APR over the chosen term (36-84 months). Shows total interest, LTV, amortization preview, and quick what-if scenarios (extra down payment, lower rate, shorter term).
Disclaimer: Sales tax treatment of trade-ins varies by state. Dealer markups, GAP insurance, and extended warranties can substantially increase the financed amount. Always negotiate the out-the-door price, not the monthly payment.
Calculator information
📋 How to use this calculator
- Enter the vehicle's sticker price or out-the-door price. Example: $35,000.
- Fill in trade-in value if applicable; in most US states, the trade-in reduces the taxable amount.
- Add sales tax (typically 5-9% depending on state) and dealer fees (doc fee, registration, title).
- Enter your cash down payment and loan term (36-84 months); the sweet spot is 48-60 months to minimize total interest.
- Enter APR; US new car average APR is around 7.5% (2026), and used car loans often run 1-2 points higher.
- Review the outputs: monthly payment, total interest paid, initial LTV, and amortization schedule. Compare what-if scenarios across different terms.
- Tip: An ideal auto loan payment is under 10% of gross income; total transportation costs (payment + insurance + fuel + maintenance) should stay under 15-20%.
🧮 Auto Loan Payment and Out-the-Door Price
OTD = (price - trade_in) * (1 + tax) + fees ; loan = OTD - down_payment ; M = loan * [r*(1+r)^n] / [(1+r)^n - 1]
- OTD = out-the-door price (total amount due at vehicle pickup)
- price = negotiated vehicle price
- trade_in = trade-in value (tax-exempt in most US states)
- tax = sales tax rate (decimal)
- fees = doc fee, registration, title (typically $300-700 in the US)
- r = APR / 12, n = term in months
Sales tax treatment of trade-ins varies by state. California, Hawaii, Maryland, Michigan, Virginia, and a few others tax the full purchase price; most other states tax only the difference. Some states also cap doc fees (e.g., California $85, New York $175).
💡 Worked example: Buying a $32,000 vehicle with $8,000 trade-in, 60 months at 7% APR
Given:- Price: $32,000
- Trade-in: $8,000
- Sales tax: 7% (applied to taxable amount after trade-in)
- Dealer fees: $600
- Down payment: $4,000
- Term: 60 months
- APR: 7%
Steps:- Taxable amount = 32,000 - 8,000 = $24,000.
- Sales tax = 24,000 * 0.07 = $1,680.
- OTD = 24,000 + 1,680 + 600 = $26,280.
- Loan amount = 26,280 - 4,000 = $22,280.
- r = 0.07 / 12 = 0.005833. n = 60. (1+r)^60 = 1.4176.
- M = 22,280 * (0.005833 * 1.4176) / (1.4176 - 1) = 22,280 * 0.008269 / 0.4176 = $441.15 per month.
- Total paid: 441.15 * 60 = $26,469. Total interest: 26,469 - 22,280 = $4,189.
Result: Monthly payment $441, total interest $4,189 over 5 years. Initial LTV: 22,280 / 26,280 = 85%.
❓ Frequently asked questions
Does a trade-in reduce sales tax?
In most US states (except California, Hawaii, Maryland, Michigan, Virginia, and a few others), the trade-in reduces the taxable amount, so sales tax is calculated on the price difference. Savings can be meaningful: a $10,000 trade-in at 7% tax saves $700. Always confirm your state's rule before assuming the trade-in lowers your tax bill.
What is the ideal auto loan term?
Shorter terms (36-48 months) yield less total interest but higher monthly payments; longer terms (72-84 months) lower payments but raise underwater risk (loan balance exceeds market value). The sweet spot is typically 48-60 months: payments stay affordable and depreciation doesn't outpace your loan balance. Avoid 84-month loans unless absolutely necessary.
What is underwater or negative equity on an auto loan?
Being underwater means your loan balance exceeds the vehicle's market value, common in the first few years because new cars depreciate 20-25% in year one. The risk: if your vehicle is totaled, insurance only pays market value, leaving you to cover the gap. GAP insurance covers this difference; consider it if your down payment is under 20%.
Is leasing or financing a better choice?
Leasing typically has lower monthly payments but no equity at the end; it suits drivers who replace vehicles every 2-3 years. Financing (buying with a loan) builds equity, and the vehicle is yours after payoff - total cost is usually lower if you keep the car 5+ years. Leases also impose mileage limits (typically 10,000-15,000 miles/year), with overage penalties of $0.15-0.30 per mile.
What's the difference between bank, credit union, and dealer financing?
Captive dealer financing (Toyota Financial, Honda Financial, Ford Credit) sometimes offers promotional APRs (even 0%) on select models, but with strings attached - shorter terms or larger down payments. Credit unions often beat banks by 0.5-1.5 points and are worth checking first. Banks offer competitive rates for prime credit (740+). Always compare total interest paid, not just APR.
📚 Sources & references
Last updated: May 11, 2026