Car Loan Calculator

A car is often the second-largest purchase people make, after a home. The monthly payment depends on more than the price: sales tax, fees, your down payment, a trade-in, the interest rate and the loan length all matter. This calculator puts them together and shows the total cost.

What this calculator does

Enter the car price, sales tax rate, fees, down payment, trade-in value, interest rate, loan term and, optionally, your gross monthly income. It shows:

• your monthly payment,
• the amount financed,
• the total interest,
• the total cost of the car, and
• the payment as a share of your income.

The formula in plain English

Amount financed = price × (1 + sales tax) + fees − down payment − trade-in.

Monthly payment = the standard loan payment for that amount, rate and term.

Total interest = monthly payment × number of months − amount financed.

Total cost = price + sales tax + fees + total interest.

Income share = monthly payment ÷ gross monthly income.

A worked example

Dr. Ellis is buying a $38,000 car. Sales tax is 7%, fees are $1,200, and she's putting $6,000 down. The loan is 6.9% for 60 months.

• Amount financed: about $35,860.
• Monthly payment: about $708.
• Total interest: about $6,640.
• Total cost: about $48,500.

With a 48-month loan instead, the payment would rise to about $857, but she'd save about $1,360 in interest. With $10,000 down, the 60-month payment would drop to about $629.

Why it matters at each career stage

If you're: Student

If you need a car in school, a reliable used car keeps borrowing low. Every dollar of car loan competes with tuition and living costs.

If you're: Resident / fellow

Residents are often approached by dealers offering special financing. Keep the payment small. A modest, reliable car leaves more room for emergencies and loan payments.

If you're: Employed

After training, it's tempting to reward yourself with an expensive car. That's fine if it fits your plan, but a large car payment can slow down savings and debt payoff for years. Try the 20/4/10 guideline.

Ways to lower the cost

Get pre-approved. Compare a credit union or bank rate with the dealer's.

Negotiate the price, not the payment. Dealers can make any payment look good by stretching the loan.

Put more down. A bigger down payment lowers the payment and interest.

Keep the term short. Four years or less limits interest and keeps you from owing more than the car is worth.

Consider certified used. A two- or three-year-old car can save thousands in depreciation.

Watch add-ons. Extended warranties and service plans are often overpriced and rolled into the loan.

Total cost of owning a car

The loan is only part of the cost. Insurance, fuel or charging, maintenance, registration and parking add up. Depreciation, how much value the car loses each year, is often the largest cost of all for new cars. Before buying, add these to your budget to see the full monthly cost.

Leasing instead

Leasing usually has a lower monthly payment than buying, because you pay only for the car's expected loss in value during the lease, plus fees and interest. But at the end you own nothing, and mileage limits and wear charges can add costs. Leasing can make sense if you want a new car every few years and drive a predictable number of miles; buying and keeping a car for many years usually costs less overall.

Paying cash vs financing

If you have the cash and the loan rate is high, paying cash avoids interest. If the rate is very low, such as a promotional 0%–2% offer, financing and keeping your cash invested or in savings can make sense. Either way, don't drain your emergency fund for a car.

Next, set your budget, see whether to invest or pay off debt, or plan a full debt payoff.