Car Finance Calculator
Calculate monthly car payments, total interest, and full purchase cost including sales tax, fees, down payment, and trade-in value.
About the Car Finance Calculator
Buying a car involves a surprisingly complex set of financial calculations beyond the sticker price. Sales tax, dealer fees, trade-in value, and down payment all affect how much you actually borrow, which in turn determines your monthly payment and total interest cost. Our car finance calculator lets you model the complete purchase to see the true cost before you sign anything.
The monthly payment is calculated using standard loan amortization: the lender charges monthly interest on the outstanding balance, and each payment covers that month's interest plus a portion of principal. Over the loan term, you pay down the entire balance. Longer terms (72 or 84 months) lower monthly payments but significantly increase total interest paid — often by thousands of dollars compared to a 36 or 48-month loan.
When evaluating a car purchase, compare the total cost (down payment + all monthly payments) rather than focusing only on the monthly payment. Dealers often extend loan terms to keep the monthly payment low while collecting far more in total interest. A car that costs $25,000 financed over 84 months at 9% costs about $5,700 more in interest than the same car financed over 48 months — a substantial difference that is invisible if you only compare monthly payments.
Understanding Total Car Purchase Costs
The sticker price (MSRP) is just the starting point of a car purchase. Sales tax varies by state — from 0% in Montana, Oregon, New Hampshire, and Delaware to over 9% in some Tennessee counties. This alone adds thousands to the purchase price of a mid-range vehicle. Dealer fees (documentation, processing, destination) typically run $200–$1,500 depending on the state and dealer. These charges are added to the amount financed unless paid in cash at signing.
A trade-in reduces the financed amount but requires careful negotiation. Dealers may offer below-market trade-in values, particularly when they also control the financing. Getting a separate trade-in quote from sources like CarMax, Carvana, or an independent appraisal gives you leverage to negotiate a fair trade-in credit. The trade-in is most tax-advantaged in states where tax is calculated on the purchase price minus the trade-in allowance.
Gap insurance is worth considering when financing a new or nearly-new vehicle with a small down payment over a long term. Because cars depreciate fastest in the first year or two, the loan balance can exceed the vehicle's market value — leaving you 'underwater' or 'upside down' on the loan. If the car is totaled in an accident, standard insurance only pays the market value, not the loan balance. Gap insurance covers the difference, preventing a situation where you owe money on a car you no longer own.