Car Loan Calculator

Q: How is a car loan payment calculated?

Car loan payments use standard amortization: M = P × [r(1+r)^n] / [(1+r)^n − 1], where P = loan amount (including sales tax if financed), r = monthly interest rate, n = number of payments. Early payments are mostly interest; later payments shift toward principal. Add sales tax and fees to the vehicle price before calculating if you're financing them.

Q: What is a good interest rate for a car loan in 2026?

Car loan rates vary by credit score and loan term. Excellent credit (750+): typically 4–6%. Good credit (700–749): 6–8%. Fair credit (650–699): 9–13%. Rates are usually lower for new cars than used cars. Credit unions and online lenders often offer better rates than dealership financing.

Q: How much car can I afford?

A common guideline: keep your car payment under 15% of monthly take-home pay. Total transportation costs (payment + insurance + gas + maintenance) should stay under 20–25%. On $4,000/month take-home, aim for a car payment under $600. Our calculator helps you find the maximum loan amount for any payment target.

Q: Should I choose a 60-month or 72-month car loan?

Shorter terms mean higher payments but less total interest and faster equity. A 60-month loan typically costs $2,000–$4,000 less in total interest than a 72-month loan on a $30,000 vehicle at similar rates. 72-84 month loans risk being 'underwater' (owing more than the car's value) as vehicles depreciate quickly in the first few years.

Q: Does sales tax get added to a car loan?

Usually yes, unless you pay it upfront. In most states, sales tax is calculated on the vehicle price minus trade-in value. This amount is typically rolled into the loan, meaning you pay interest on the tax too. Our calculator automatically includes sales tax in the financed amount so you see the true monthly cost.

Q: Is it better to make a larger down payment on a car?

A larger down payment reduces your loan amount, monthly payment, and total interest paid. It also helps you avoid being 'underwater' early in the loan. As a general rule, put at least 20% down on a new car and 10% on a used car. This helps offset rapid initial depreciation and keeps your loan-to-value ratio healthy.

Q: Can I refinance a car loan to get a lower rate?

Yes. Car loan refinancing replaces your existing loan with a new one, ideally at a lower rate. Good candidates: your credit score has improved since the original loan, market rates have dropped, or you took a high-rate dealer loan. Most refinances can be done online in minutes through lenders like LightStream, PenFed, or your credit union. Aim to refinance within the first 3 years before too much interest has accrued.

Q: How does a car loan affect my credit score?

A car loan affects your credit in several ways: hard inquiry at application (small, temporary drop), adds to your credit mix (positive for scores), and payment history (most important factor, 35% of FICO score). On-time payments build credit over time. Missed payments hurt significantly. Paying off the loan early can slightly lower your score by reducing open accounts, but the effect is minor.

Calculate your monthly car payment, total interest, and true cost of the loan including sales tax and trade-in.

Updated October 2026

Car Loan Details

Vehicle Price

$

Down Payment

$

Trade-In Value

$

Loan Term

Annual Interest Rate (APR)

% / year

Sales Tax Rate

%

Payment Summary

Monthly Payment$665.32

Loan Summary

Loan Amount

$33,600.00

Sales Tax

$2,100.00

Total Interest

$6,319.20

Total Cost

$43,419.20

Amortization Schedule

Mo.	Principal	Interest	Balance
6	$483.17	$182.15	$30,742.69
12	$500.33	$164.99	$27,783.91
18	$518.10	$147.22	$24,720.04
24	$536.50	$128.82	$21,547.36
30	$555.55	$109.77	$18,262.01
36	$575.28	$90.04	$14,859.99
42	$595.71	$69.61	$11,337.14
48	$616.87	$48.45	$7,689.18
54	$638.78	$26.54	$3,911.65
60	$661.44	$3.86	$0.00

2026 Data

IRS-Sourced

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How Car Loan Payments Are Calculated

Car loan payments use the same amortization formula as mortgages: your monthly payment is calculated so that equal payments over the loan term pay off the principal plus all interest exactly. Early payments are mostly interest; later payments shift toward principal.

Sales Tax

Most states charge sales tax on vehicle purchases, typically on the purchase price minus any trade-in allowance. Rates range from 0% (states like Oregon, Montana, Delaware) to over 9% in some counties. Sales tax is usually rolled into the loan amount unless paid upfront, meaning you're financing the tax and paying interest on it.

Trade-In Value

A trade-in reduces the vehicle price before tax is calculated (in most states), reducing your taxable amount and your loan balance. Get multiple trade-in quotes, dealer offers are often 10-20% below private-party values.

Loan Term Trade-Offs

Longer terms (72-84 months) mean lower monthly payments but significantly more total interest, and risk of being "underwater" (owing more than the car is worth) as vehicles depreciate. Most financial advisors recommend keeping car loan terms at 60 months or less.

Car Loan Calculator. Frequently Asked Questions

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Disclaimer: For informational purposes only. Not tax, legal, or financial advice.