Car Payment Calculator
Sticker price to real monthly payment, including the tax and fees dealers roll in.
An estimate. Dealers structure tax and fees differently by state.
Why the sticker price is never the loan amount
The number you finance is rarely the number on the windscreen. Sales tax, title, registration and dealer documentation fees push it up; your down payment and trade-in equity pull it down. Get any of those wrong and the monthly figure you budgeted for and the one on the contract will not match — usually by more than people expect.
Worked example: a typical deal
A 32,000 car, 4,000 down, a trade-in worth 6,000 with nothing owed on it, 7 percent sales tax and 600 in fees, financed at 7 percent APR over 60 months. Tax applies to 32,000 - 6,000 = 26,000, so 1,820. Amount financed = 32,000 + 1,820 + 600 - 4,000 - 6,000 = 24,420. At 7 percent over 60 months that is 483.53 a month, 29,011.80 in total, and 4,591.80 of interest.
Worked example: rolling in negative equity
Same deal, but the trade-in is worth 6,000 and you still owe 9,000 on it. Equity is now minus 3,000, so the financed amount climbs to 27,420 and the payment to 542.87. You are paying interest on a car you no longer own, which is the mechanism behind long chains of upside-down trades.
How term length changes the picture
| Term | Payment on 24,420 at 7% | Total interest |
|---|---|---|
| 36 months | 754.03 | 2,725 |
| 48 months | 584.66 | 3,644 |
| 60 months | 483.53 | 4,592 |
| 72 months | 416.42 | 5,562 |
| 84 months | 368.66 | 6,558 |
What to watch in the finance office
Negotiate the price of the car, not the monthly payment. A dealer can hit almost any monthly target by stretching the term, and the table above shows what that costs: 84 months instead of 60 saves 115 a month and adds nearly 2,000 in interest, while leaving you owing more than the car is worth for most of the loan.
Check whether the APR quoted includes the finance charges, and whether extras — gap insurance, service plans, paint protection — have been folded into the amount financed. Those add to the principal and therefore accrue interest for the whole term. And confirm how your state treats trade-ins for tax: a few charge tax on the full price, which changes the arithmetic here by several hundred.
Sources & further reading
Frequently asked questions
How is a car payment calculated?
It is the standard amortising loan formula: payment = P x r / (1 - (1 + r)^-n), where P is the amount financed, r is the monthly rate (APR divided by 12) and n the number of months. Financing 25,000 at 7 percent over 60 months gives 495.03 a month.
Does my trade-in reduce the sales tax?
In most US states, yes: tax is charged on the price minus the trade-in allowance, which is why trading in can beat selling privately once tax is counted. A handful of states tax the full price regardless. This calculator applies tax after the trade-in, the more common rule.
What happens if I owe more than the trade-in is worth?
That negative equity gets added to the new loan. Entering an amount owed above the trade-in value rolls the difference into the financed amount, which is exactly what a dealer does — and it is why a longer term can leave you underwater again on the next car.