Calculate your car loan monthly payment, total interest and true cost of the vehicle. Includes trade-in value, down payment, sales tax and dealer fees for a complete auto finance picture.
Enter the vehicle price, down payment, trade-in value, sales tax rate, dealer fees, interest rate and loan term to see your true monthly cost and total expense.
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A car loan payment is calculated on the financed amount — the vehicle price plus tax and fees, minus down payment and trade-in. The formula is the same amortisation calculation used for any loan: Monthly Payment = Financed Amount x r x (1+r)^n / ((1+r)^n - 1). Your total out-of-pocket cost includes the down payment plus all monthly payments, which this calculator shows in full.
Financial advisers typically recommend a minimum 20% down payment on a new car and 10% on a used car. A larger down payment reduces the financed amount, lowering monthly payments and total interest. It also helps avoid being underwater (owing more than the car is worth) since new cars depreciate 15-25% in the first year. A down payment under 10% on a new vehicle significantly increases the risk of negative equity.
Auto loan rates in the US (2024-2025): excellent credit (750+) typically qualifies for 4-6% on new cars and 6-8% on used cars. Good credit (700-749) gets 6-9% new, 8-12% used. Fair credit (650-699) gets 9-15%. Below 650 rates can exceed 15-20%. Credit unions typically offer lower rates than dealerships. Always get pre-approved by your bank or credit union before visiting a dealer — this gives you negotiating leverage.
Dealers often mark up the interest rate from what lenders offer them (dealer reserve), meaning you pay more. Getting pre-approved by your bank or credit union first gives you a baseline rate to beat. Sometimes manufacturers offer promotional rates (0% or 1.9%) that beat any outside financing — these are worth taking if you qualify. Compare the total interest cost, not just the monthly payment, when evaluating finance options.
Common car purchase fees include: documentation fee (dealer admin charge, typically $150-500), destination and delivery charge ($900-2,000 for new cars), sales tax (varies by state, typically 4-10%), registration and title fees ($50-500 depending on state), and dealer add-ons (extended warranty, paint protection, gap insurance). Always ask for an itemised out-the-door price before agreeing to any deal.
Gap insurance covers the difference between what you owe on your auto loan and the actual cash value of the vehicle if it is totalled or stolen. Since new cars depreciate rapidly, you could owe more than the car is worth — especially with a small down payment or long loan term. Gap insurance is worth considering if your down payment is less than 20%, your loan term exceeds 60 months, or you are rolling negative equity from a previous vehicle.
If your trade-in is worth more than you owe (positive equity), the equity reduces your new vehicle purchase price. If you owe more than it is worth (negative equity or underwater), the deficit is typically rolled into the new loan — increasing your debt. Rolling negative equity is a dangerous cycle: you pay more interest and start further underwater. Try to pay down the old loan or save a larger down payment before trading in.
Financial experts recommend 48 months or fewer for used cars and 60 months or fewer for new cars. 72 and 84-month loans are increasingly common but carry significant risks: higher total interest, prolonged period of negative equity, and the likelihood the car needs repairs before the loan ends. The monthly payment savings from a longer term are offset by substantially higher total cost — on a $30,000 loan at 7%, extending from 48 to 72 months adds over $3,000 in interest.
