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Car Payment Calculator Guide
Before you sign at the dealership, know your real monthly payment. This calculator factors in your down payment, trade-in, sales tax, interest rate, and term to show the monthly payment, the amount financed, and the total interest.
Amount financed = price + sales tax − down payment − trade-in. The monthly payment is then M = P × r ÷ (1 − (1 + r)−n), where r is APR ÷ 12 and n is the term in months.
How Do I Calculate a Car Payment?
Add sales tax to the price, subtract your down payment and trade-in to get the loan amount, then apply the amortization formula. In most states, sales tax is charged on the price minus your trade-in — which can save you a meaningful amount.
What Affects Your Car Payment
| Factor | Effect on Payment |
|---|---|
| Larger down payment / trade-in | Lower payment and less interest |
| Higher APR | Higher payment and more interest |
| Longer term (72–84 mo) | Lower payment but much more interest |
| Higher sales tax | Higher amount financed |
Worked Example
A $35,000 car, $5,000 down, no trade, 7% tax, 6.5% APR over 60 months: tax = $2,450; financed = 35,000 + 2,450 − 5,000 = $32,450; payment ≈ $635/month, total interest ≈ $5,650.
Tips
- Watch the term. A 72- or 84-month loan lowers the payment but you pay far more interest and risk being "underwater."
- Get pre-approved. A bank or credit union rate gives you leverage against dealer financing.
- Negotiate the price, not the payment. Dealers can hide cost in a longer term.
Comparing to leasing? Try our Auto Lease Calculator, and estimate running costs with the Fuel Cost Calculator.
Estimates for planning only; actual rates, taxes, and fees vary by lender and state.
Frequently Asked Questions
How do I calculate a car payment?
Add sales tax to the price, subtract your down payment and trade-in for the loan amount, then apply the loan payment formula using the APR and term.
What is the monthly payment on a $35,000 car?
About $635 a month with $5,000 down at 6.5% APR over 60 months, including 7% sales tax.
Does a trade-in reduce sales tax?
In most states yes — sales tax is charged on the price minus the trade-in value, lowering your tax.
Is a longer car loan cheaper?
The monthly payment is lower, but a longer term means significantly more total interest.
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