Auto Loan Calculator

Auto loans use standard level-payment amortization. Your monthly payment (PMT) is calculated based on the total amount financed, the annual interest rate divided by 12, and the loan term in months. Each monthly payment is split between interest (calculated on the unrounded remaining balance) and principal (the rest of the payment that reduces your debt). Over time, as your balance decreases, the interest portion shrinks and the principal portion grows.

Negative equity occurs when you owe more on your existing vehicle loan than the dealership offers for trade-in value. If your trade-in is valued at $10,000 but your loan payoff is $13,000, that $3,000 shortfall is rolled directly into the principal balance of your new loan. This increases your monthly payment, raises your total interest paid, and results in a Loan-to-Value (LTV) ratio above 100%, leaving you immediately underwater on the new vehicle.

In 42+ US states, yes. Most states grant a trade-in sales tax credit, charging sales tax only on the net difference between the new car purchase price and your trade-in allowance. For instance, trading in a $10,000 car on a $30,000 purchase means you only pay sales tax on $20,000. However, in states like California, Virginia, Maryland, and DC, sales tax applies to the full purchase price regardless of trade-in value.

While 72 and 84-month loans lower your monthly payment, they dramatically increase the total interest you pay over the loan term. More importantly, new vehicles depreciate by roughly 20% in the first year and 40-50% over the first three years. With a 72 or 84-month term, your loan balance drops much slower than the car depreciates, keeping you in a negative equity position for four or more years.

A healthy auto loan LTV is 80% to 90% or lower (meaning your down payment and positive trade equity cover at least 10% to 20% of the vehicle price plus taxes and fees). An LTV over 100% means you owe more than the vehicle is worth on day one. Lenders charge higher interest rates on high-LTV loans, and buyers with LTVs over 100% should consider GAP insurance to protect against total-loss shortfalls.

Financing dealer doc fees, title, registration, and sales tax adds those costs to your principal loan balance, meaning you pay interest on those fees for the entire 48 to 84-month term. Paying taxes and dealer fees upfront in cash keeps your loan principal lower, reduces your total interest cost, and improves your starting LTV.

Credit scores dictate lender risk tiers. Super-prime borrowers (credit scores 780+) typically qualify for promotional manufacturer APRs (such as 0% to 4.9%), while prime borrowers (660-779) receive competitive bank rates (5% to 8%). Non-prime and subprime borrowers (under 660) face significantly higher interest rates (12% to 20%+), which can add thousands of dollars in interest over the loan term.

At 6.5% APR over 60 months, every $1,000 you do not finance lowers the payment by $19.57 a month and saves $173.97 of interest over the loan (PMT = 1,000 × 0.0054167 × 1.0054167^60 ÷ (1.0054167^60 − 1)). On the calculator's default $35,000 car, raising the down payment from $4,000 to $5,000 therefore takes the payment from $662.29 to $642.73. A larger down payment also lowers your loan-to-value ratio, which can qualify you for a better rate.