# Car Loan Calculator

Calculate your monthly car payment, total interest, and loan cost. Free auto loan calculator with sales tax, down payment, and term options.

## What this calculates

Estimate your monthly auto loan payment before you visit the dealership. Enter the vehicle price, down payment, interest rate, and loan term to see your payment, total interest, and overall cost.

## Inputs

- **Vehicle Price** ($) — min 0 — The purchase price of the vehicle.
- **Down Payment** ($) — min 0 — Cash paid upfront or trade-in value.
- **Annual Interest Rate** (%) — min 0, max 30 — The APR on your auto loan.
- **Loan Term** — options: 24 months (2 years), 36 months (3 years), 48 months (4 years), 60 months (5 years), 72 months (6 years), 84 months (7 years) — The length of your auto loan.
- **Sales Tax Rate** (%) — min 0, max 15 — Your state/local sales tax rate on vehicle purchases.

## Outputs

- **Monthly Payment** — formatted as currency — Your estimated monthly auto loan payment.
- **Total Interest Paid** — formatted as currency — Total interest over the life of the loan.
- **Total Cost** — formatted as currency — Total of all payments plus down payment and tax.
- **Loan Amount** — formatted as currency — Amount financed after down payment and tax.

## Details

An auto loan is an installment loan used to purchase a vehicle. Like mortgages, car loans use the standard amortization formula to calculate fixed monthly payments. The monthly payment depends on the loan amount (vehicle price plus tax minus down payment), interest rate, and loan term.

The formula is: M = P[r(1+r)^n] / [(1+r)^n - 1], where P is the principal (loan amount), r is the monthly interest rate, and n is the number of monthly payments. A larger down payment or shorter loan term will reduce total interest costs significantly.

Financial experts recommend keeping your total car costs (payment, insurance, gas, maintenance) below 15-20% of your take-home pay. Shorter loan terms (36-48 months) typically have lower interest rates and much less total interest than 72-84 month loans. A longer term may offer a lower monthly payment, but you risk owing more than the car is worth (being "upside down" on the loan).

## Frequently Asked Questions

**Q: What is a good interest rate for a car loan?**

A: Interest rates for car loans depend heavily on your credit score, loan term, and whether the vehicle is new or used. As of recent averages, excellent credit (750+) can qualify for rates around 4-6% for new cars. Good credit (700-749) typically sees 5-8%. Fair credit (600-699) may face rates of 8-14%. Used car loans generally have rates 1-2% higher than new car loans for the same credit tier.

**Q: How much should I put down on a car?**

A: Financial advisors typically recommend a down payment of at least 20% for new cars and 10% for used cars. A larger down payment reduces your monthly payment, lowers total interest costs, and decreases the risk of being upside down on the loan. If you are trading in a vehicle, its value counts toward your down payment. Even a modest down payment is better than financing 100% of the purchase price.

**Q: Is a longer car loan term better?**

A: A longer loan term (72-84 months) lowers your monthly payment but costs significantly more in total interest. For example, financing $30,000 at 6.5% for 60 months costs about $5,200 in interest, while the same loan at 72 months costs about $6,300. Longer terms also increase the risk of negative equity. Most financial experts recommend terms of 48-60 months to balance affordable payments with reasonable total cost.

**Q: Should I include sales tax in my car loan?**

A: Sales tax is usually included in the total amount financed unless you pay it separately at purchase. This calculator includes sales tax in the loan amount by default. Keep in mind that financing sales tax means you pay interest on it over the life of the loan. If possible, paying the sales tax out of pocket can save money. Sales tax rates vary by state, ranging from 0% to over 10%.

**Q: Can I pay off a car loan early?**

A: Most auto loans allow early payoff without penalty, but check your loan agreement for prepayment penalties. Paying extra each month or making a lump-sum payment can significantly reduce your total interest. Some loans use simple interest (interest calculated on remaining balance), which rewards early payments. Others use precomputed interest, where the savings from early payoff may be less significant.

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Source: https://vastcalc.com/calculators/finance/car-loan
Category: Finance
Last updated: 2026-04-21