Auto Loan Calculator

An auto loan payment is calculated by amortizing the financed amount over a fixed number of months. The formula is M = P × r(1+r)^n ÷ ((1+r)^n − 1). Here, P is the amount financed, r is APR divided by 12 and expressed as a decimal, and n is the term in months. Each month’s interest equals the previous balance times r; the rest of the payment reduces principal. The final row uses the remaining balance exactly, so the closing balance is $0.00 instead of carrying a cent-level floating-point residue.

For a clean reference case, finance $30,000 at 5% APR for 60 months with no tax or fees. The monthly rate is 0.05 ÷ 12 = 0.0041667. Substitution produces a payment of $566.14. The first month’s interest is $125.00, so about $441.14 reduces principal. Across all payments the unrounded formula produces about $3,968.22 of interest.

The transaction layer comes before amortization. Positive trade equity lowers principal; negative equity raises it. Tax is computed from the vehicle price minus the eligible trade-in allowance, subject to the selected rule and any cap. The rebate is subtracted after the tax calculation because third-party and manufacturer rebate treatment varies. If tax and fees are paid upfront they appear outside the loan; if financed, they enter P and accrue interest.

The Federal Reserve’s release dated August 7, 2026 reports a 7.14% average APR for 60-month new-car loans and 6.97% for 72-month loans at commercial banks in Q2 2026. Those figures are benchmarks, not underwriting offers. Credit history, income, loan-to-value, new versus used status, lender channel and manufacturer support can move an actual quote materially.

Vehicle tax cannot be perfectly identified from state alone. Florida DOR’s February 2026 table supplies the state-rate defaults, but it explicitly excludes local tax and says purchasers should verify with their home-state authority. Several states show no general sales tax in that table because they levy a title ad-valorem, excise, registration or highway-use tax instead. This calculator therefore exposes the rate and trade-in treatment as inputs rather than presenting a nationwide lookup as a tax determination.

Two rules illustrate why the branch matters. California’s Department of Tax and Fee Administration says a dealer that sells a $20,000 vehicle and accepts a $4,000 trade still reports tax on $20,000. The Texas Comptroller says its 6.25% motor-vehicle tax applies to sales price minus a qualifying trade-in allowance. Michigan’s 2026 instructions add another wrinkle: an eligible vehicle trade-in deduction exists but is capped at $12,000.

Calculating from sticker price. The loan amortizes the amount financed, not MSRP. Down payment, rebate, trade balance, tax, fees and add-ons must be reconciled first.

Treating APR as the contract interest rate without checking disclosures. APR can include mandatory finance charges. Use the lender’s Truth in Lending box and compare the same measure across offers.

Assuming every state subtracts the whole trade before tax. California does not; Michigan limits the eligible 2026 deduction to $12,000; private-party, lease and title rules can differ.

Using only a state rate where local tax applies. A state base rate can understate the dealer’s tax. Replace the default with the effective rate from the buyer order or the relevant revenue authority.

Ignoring negative equity. Subtracting the trade value without adding the old payoff makes an underwater trade look beneficial. Enter both figures so the net position is visible.

Carrying forward expired programs. Illinois’s $10,000 trade-in cap applied only in 2020–2021, and the IRS says federal clean-vehicle purchase credits ended for vehicles acquired after September 30, 2025.

Choosing a term by payment alone. A low 84- or 96-month payment can conceal much more interest and a longer negative-equity window. Read the comparison and total-interest figures together.

Rounding every month too early. Cent-rounding the working balance can leave a false residual. This schedule keeps full precision internally and reconciles the final payment.