Car Loan Calculator

Budget for Your Next Vehicle

Our Car Loan Calculator helps you budget for your next vehicle purchase by estimating your monthly payment. It takes into account the vehicle price, your down payment, trade-in value, loan term, interest rate, and sales tax. This allows you to understand the full cost of financing before you step into a dealership.

The Loan Formula Explained

The calculator first determines the total loan amount and then uses the standard fixed-loan payment formula:

1. Total Loan Amount (P): (Vehicle Price - Trade-in Value) * (1 + Sales Tax %) - Down Payment
2. Monthly Payment (M): M = P[r(1+r)^n] / [(1+r)^n - 1]
   • r is the monthly interest rate.
   • n is the number of months in the loan term.

How to Use the Calculator

1. Vehicle Price: Enter the sticker price or negotiated price of the car.
2. Down Payment & Trade-in: Input any cash down payment and the value of your trade-in vehicle.
3. Loan Term & Interest Rate: Select the loan duration in months and enter the annual interest rate.
4. Sales Tax: Enter your local sales tax percentage.

Real-World Example

You want to buy a $30,000 car. You have a $5,000 down payment and a $2,000 trade-in. You secure a 60-month (5-year) loan at 7% interest, and sales tax is 6%.

• Taxable Amount: $30,000 - $2,000 = $28,000
• Sales Tax: $28,000 * 0.06 = $1,680
• Total Loan Amount: $30,000 + $1,680 - $5,000 - $2,000 = $24,680
• Using the monthly payment formula, the estimated payment would be $490.62.

Frequently Asked Questions (FAQ)

• Does sales tax apply to the trade-in value? In most states, the value of your trade-in is deducted from the new car's price before sales tax is calculated, which can result in significant tax savings.
• What other fees should I consider? The final loan amount may also include dealership fees, title fees, and registration fees, which are not included in this calculator. Always ask for an 'out-the-door' price from the dealer.
• How does my credit score affect the loan? Your credit score is the single most important factor in determining the interest rate you'll receive. A higher credit score will qualify you for a lower interest rate, which can save you thousands of dollars over the life of the loan.