Auto Loan Calculator

How the numbers stack up

Auto loans look like just price minus down payment, but the trade-in changes three things at once: equity, the tax base, and sometimes a negative-equity surcharge that gets rolled into the new loan:

equity          = max(0, trade-in value − trade-in owed)
negative equity = max(0, trade-in owed − trade-in value)
sales tax       = (price − trade-in value) × sales tax %  when credit applies
                = price × sales tax %                  when it doesn't
amount financed = price + tax + fees − equity + negative equity − cash down
monthly payment = standard amortization at APR / 12 over the term

Worked example — the page default, $32,000 / $9,000 / $6,000 owed / $3,000 down / 6.9% / 60 mo / 7% tax on the post-trade price / $500 fees:

1. Equity: max(0, 9000 − 6000) = $3,000
2. Tax base: 32,000 − 9,000 = $23,000 → sales tax $1,610
3. Amount financed: 32,000 + 1,610 + 500 − 3,000 + 0 − 3,000 = $28,110
4. Monthly at 6.9% / 60 mo: $555.29
5. Total interest: 555.29 × 60 − 28,110 = $5,207.18; total paid $33,317.18

Without the trade-in at all, the same car costs $626.99 a month — that's a $71.70 monthly saving and $672.44 less interest over the life of the loan.

The same car, four ways to finance it

The third row is the one people get burned on: when you owe $12,000 on a car worth $9,000, the $3,000 shortfall doesn't go away — it gets rolled into the new loan, and the monthly payment is now $46.82 higher than not trading in at all. The calculator shows the negative-equity figure and the comparison both, so the "trade-in always saves" claim can't hide.

The second row shows the tax question. Whether the sales tax is applied to the post-trade-in price (the most common arrangement) or the full sticker (a handful of states) is the single biggest line-item difference, and it can swing the monthly by $12 or so before any other input changes.

The inputs that change the answer most

• Trade-in value vs. trade-in owed. The two are independent: a high value with no loan still produces equity; a low value with a high loan produces negative equity that gets financed. Both are entered separately, and the sign of the difference is the whole story.
• Sales tax base. Ticking Tax on the post-trade-in price drops the tax base by the trade-in value (the most common arrangement) and saves you roughly the trade-in value × tax rate. The default has it on; the second scenario in the table shows the off case.
• Fees. Title, registration, and dealer doc fees typically run $200–$1,000 and add to the financed amount. They're a small monthly line but a real one.
• Term. Stretching 60 → 72 months drops the monthly payment by about $77 on the default inputs but adds roughly $1,092 in total interest. The calculator's term comparison is in the page below the inputs — use it before picking a term.

How to use this calculator

1. Enter the vehicle price (the sticker on the car you're buying).
2. Enter the trade-in value and what you still owe on it — independently, not as a single number.
3. Enter your cash down payment.
4. Enter the APR and the term in months.
5. Enter the sales tax rate for your state, and tick the box if your state taxes only the post-trade-in price.
6. Add title and doc fees. Read the monthly, the total cost, and the comparison to skipping the trade.

Frequently asked questions

Does a trade-in always lower my monthly payment?

No. When you owe more on the trade than it's worth, the $3,000 (or whatever) shortfall gets rolled into the new loan, and the monthly payment is higher than skipping the trade. The calculator shows the negative-equity figure separately and the comparison line says "−$71.70" or "+$46.82" so the direction can't be missed.

How is sales tax calculated on a trade-in?

It depends on the state. Most states give a credit and tax the post-trade-in price (so a $9,000 trade-in on a 7% tax takes the base from $32,000 to $23,000, saving $630 of tax). A few states tax the full sticker regardless. The checkbox is the only setting that toggles between the two, and the result of unchecking it on the default inputs is the second row in the table above.

What happens if I owe more than my trade-in is worth?

The difference — called negative equity — gets added to the amount you finance. On the default inputs with $12,000 still owed, that's $3,000 on top, and the monthly payment becomes $673.81 rather than $555.29. It's the most common way that an "I just traded in my old car" plan quietly costs more than keeping the old one.

Should I put more cash down, or use the trade-in?

Cash down and trade-in equity do the same job — they reduce the amount you finance — so on a percentage basis they save identical amounts of interest. Cash down is also a clean win because the trade-in adds a tax calculation and a possible negative-equity roll-in. If the trade-in is underwater, cash down is the only safe option.

Does the term matter that much?

Yes. On the default inputs, 60 → 72 months drops the monthly by about $77 but adds roughly $1,092 in interest. 36 months costs about $866 a month but only $3,090 in interest — about $2,117 less than the 60-month version, for $311 more per month.

Does the calculator include registration and title fees?

Yes — there's a fees field for that, and the default is $500. The figure is added to the amount financed, so it adds to the monthly payment and the total interest. Set it to 0 if your state rolls those fees into the tax instead.

Data sources: All calculations use the standard auto loan amortization formula: monthly payment = P × r / (1 − (1 + r)^−n), with r = APR / 12 and n = months. The 7% sales tax and the post-trade-in credit are the most common US arrangement; rules vary by state, and a small number of states tax the full price without a trade-in credit — confirm yours with the DMV or revenue department. The default APR of 6.9% is a placeholder, not a market rate. Every figure on this page was produced by this calculator and can be reproduced with the same inputs (the defaults are pre-filled). Related tools: loan amortization schedule, refinance calculator, compound interest calculator, all finance calculators.