How to use the car loan calculator
- Enter the price you negotiated for the car, before tax.
- Add your down payment and trade-in. Both reduce how much you borrow.
- Enter the APR and term from your lender's offer. If you do not have one yet, check your bank or credit union first; dealers often mark up the rate.
- Add sales tax and fees to see the full amount, and choose whether you are paying them upfront or financing them.
Car payment formula
P = amount financed, r = APR ÷ 12 ÷ 100, n = number of months
Worked example
You borrow $30,000 at 6.5% APR for 60 months. The monthly rate is 6.5 ÷ 12 ÷ 100 = 0.005417. The payment is $586.98 a month, and you pay $5,219.07 in interest over the five years. Stretch the same loan to 72 months and the payment drops to $504.30, but the interest rises to $6,309.45.
Shorter term or lower payment?
A longer loan lowers the monthly payment but costs more in total, and cars lose value quickly. With a 72 or 84 month loan it is easy to owe more than the car is worth for years, which hurts if you sell it or it is totaled. A common rule of thumb is 20/4/10: put at least 20% down, finance for no more than 4 years, and keep the total car costs (payment plus insurance) under 10% of your gross income.
How to get a lower car payment
- Get pre-approved by a bank or credit union before visiting the dealer, so you can compare offers.
- Negotiate the price, not the payment. A dealer can hit any monthly number by stretching the term.
- Improve your credit score before applying; the rate difference between tiers can be several points.
- Put more down to borrow less and avoid being upside down on the loan.
Want to know what the car will be worth when the loan ends? Use the car depreciation calculator. Financing a bike instead? Try the motorcycle loan calculator.
Frequently asked questions
How is a car payment calculated?
Lenders use the amortization formula: payment = P × r ÷ (1 − (1 + r)^−n), where P is the amount financed, r is the monthly interest rate and n is the number of months. $30,000 at 6.5% for 60 months is $586.98 a month.
What is a good APR for a car loan?
It depends on your credit score and whether the car is new or used. Borrowers with excellent credit get the lowest rates; used car loans and lower scores pay noticeably more. Compare at least two lenders before signing.
Is it better to take a 60 or 72 month car loan?
A 60 month loan costs less in total interest and helps you build equity faster. A 72 month loan lowers the payment but adds interest and raises the risk of owing more than the car is worth.
Should I include sales tax in my car loan?
You can roll sales tax and fees into the loan, but you will pay interest on them. Paying them upfront keeps the loan smaller.
Does a trade-in reduce sales tax?
In most US states the trade-in value is subtracted from the price before sales tax is calculated, but a few states tax the full price. Check your state's rules.
More car calculators
Last updated October 2026.