Car Loan Calculator
Work out your real monthly car payment — including sales tax, trade-in value and down payment — before you set foot in the dealership.
What actually determines your car payment
The amount you finance is the vehicle price plus sales tax, minus your down payment and trade-in. That balance is amortized over the term at your interest rate — the same formula as any fixed loan. Two levers matter most: the amount financed (negotiate the price, bring a bigger down payment) and the term length.
The long-term trap
Dealers often pitch 72- or 84-month terms because they make expensive cars feel affordable. But longer terms mean more total interest and more time "underwater" — owing more than the car is worth as it depreciates. Compare a 60- vs 84-month term above: the payment drops, but watch the "Total interest" figure climb.
Rules of thumb
- 20/4/10: 20% down, no more than a 4-year term, total vehicle costs under 10% of gross income.
- Get pre-approved by your bank or credit union first — it gives you a rate to beat and strengthens your negotiating position.
- Negotiate the vehicle price, not the monthly payment. A "lower payment" often hides a longer, costlier term.
A worked example: what the term really costs
A $35,000 vehicle with 13% sales tax and $5,000 down means financing $34,550 at, say, 6.9%. Here is the same car on four different terms:
| Term | Monthly payment | Total interest | Extra vs 48 months |
|---|---|---|---|
| 48 months | $825.74 | $5,085.56 | — |
| 60 months | $682.50 | $6,400.15 | +$1,315 |
| 72 months | $587.39 | $7,741.76 | +$2,656 |
| 84 months | $519.76 | $9,110.24 | +$4,025 |
Stretching from 48 to 84 months makes the car look $306 a month cheaper — and costs an extra $4,025 in interest for a vehicle you'll own three years later. This is the single most common way dealerships make an unaffordable car feel affordable.
Being "underwater" — the hidden risk of long terms
New vehicles typically lose a large share of their value in the first two to three years, while a long loan pays down principal slowly at the start. On an 84-month term you can easily owe more than the car is worth for the first three or four years. That matters if the car is written off in an accident — insurance pays market value, not your loan balance, leaving you owing the difference on a car you no longer have. Gap insurance covers this, and is worth pricing if your term runs past 60 months.
Before you walk into the dealership
- Get pre-approved by your bank or credit union. You arrive with a rate to beat instead of accepting whatever finance desk offers.
- Negotiate the vehicle price, never the monthly payment. "What can you afford per month?" is how a longer term gets substituted for a genuine discount.
- Settle the price before mentioning a trade-in or financing. Bundling all three lets a discount on one be quietly recovered on another.
- Read the add-ons line by line. Extended warranties, paint protection and undercoating are high-margin items and are always negotiable — or refusable.