What will my car payment be?
At an example 7% rate, each $10,000 you finance costs about $198 a month over 60 months. Find the amount you'll finance, after tax and fees and after your down payment, and read across.
| Amount financed | 48 months | 60 months | 72 months | 84 months |
|---|---|---|---|---|
| $15,000 | $359 | $297 | $256 | $226 |
| $20,000 | $479 | $396 | $341 | $302 |
| $25,000 | $599 | $495 | $426 | $377 |
| $30,000 | $718 | $594 | $511 | $453 |
| $35,000 | $838 | $693 | $597 | $528 |
| $40,000 | $958 | $792 | $682 | $604 |
| $50,000 | $1,197 | $990 | $852 | $755 |
Is a 72- or 84-month car loan worth the lower payment?
It lowers the payment, but you pay for that in interest. Going from 60 to 84 months on this loan cuts the payment by $160 a month and adds $2,935 in interest, at the same rate.
| Term | Monthly | Total interest | Could owe more than it's worth for |
|---|---|---|---|
| 36 months | $1,060 | $4,083 | Never |
| 48 months | $824 | $5,472 | Never |
| 60 months | $683 | $6,893 | 1 yr 1 mo |
| 72 months | $589 | $8,345 | 2 yrs 4 mos |
| 84 months | $523 | $9,828 | 3 yrs 9 mos |
| 96 months | $473 | $11,342 | 5 yrs 3 mos |
The table holds the rate steady, which can flatter a long loan. If the 84-month quote were 8.5% instead, interest would reach $11,254. The term buttons stop at 84 months, but the term comparison in the results runs from 24 to 96.
The bigger risk is the last column. If the car is totaled or you need to sell while you're underwater, you may have to cover the gap in cash. GAP insurance is intended to cover the difference between what you owe and what your insurer pays. It's optional, and buying it through the loan means paying interest on it.
How does a trade-in change my car payment and sales tax?
A trade-in lowers the amount you finance by its value minus what you still owe on it, and in some states it also lowers your tax.
Amount financed = price + sales tax + fees − rebates − down payment − (trade-in value − amount owed)Tax rules differ by state, so the advanced options include a "Trade-in reduces taxable price" switch. At 6.5%, a $12,000 trade-in saves $780 of tax when your state counts it. Texas does: its 6.25% motor vehicle tax applies after the trade-in, which saves $750 here. California doesn't: its regulation says the retailer must include the trade-in allowance in the amount taxed, so turn the switch off. For other states, check with your state's revenue agency.
That tax break matters if you're thinking of selling privately. If your state credits only dealer trade-ins, a private sale needs to bring in about $780 more than the dealer's $12,000 offer just to break even. The FTC also suggests settling the new car's price before you discuss a trade-in, so one number can't quietly offset the other.
What happens if I owe more than my trade-in is worth?
You still pay the difference, usually with interest. Say your car is worth $12,000 and you owe $16,000. Buy a $38,000 car with nothing down over 72 months at 7.5%, and you'd finance $44,490, more than the car costs, for $769.24 a month. The old $4,000 alone adds $69.16 a month and $980 in interest.
On this estimate you could be underwater for 3 yrs 7 mos, so the problem can follow you to the next car. The FTC warns that a dealer's promise to pay off your old loan might not be true: the balance may be added to the new loan or taken from your down payment. Get any promise in writing and check the contract.
The FTC's other options are to wait and make extra principal-only payments until you have equity, sell the car yourself, or choose the shortest term you can afford.
How much car can I afford on $300, $500, or $800 a month?
A $500 payment over 60 months at an example 7% rate finances about $25,251. With $4,000 down, $800 in fees, and 6.5% tax, that buys a car priced near $26,715.
| Monthly payment | 48 months | 60 months | 72 months | 84 months |
|---|---|---|---|---|
| $300 | $12,528 | $15,151 | $17,596 | $19,877 |
| $400 | $16,704 | $20,201 | $23,462 | $26,503 |
| $500 | $20,880 | $25,251 | $29,327 | $33,129 |
| $600 | $25,056 | $30,301 | $35,193 | $39,754 |
| $800 | $33,408 | $40,402 | $46,924 | $53,006 |
A common rule of thumb keeps the payment under about 10% of gross income, before insurance and fuel. That's $500 a month on $60,000 a year. Enter your income in the advanced options to run this check, then test the whole car budget in the budget calculator.
Should I take 0% financing, a rebate, or my own bank's loan?
Run both, because the winner depends on the rate you can get elsewhere. If a dealer offers 0% for 60 months or $3,000 off a $32,000 car, the 0% deal costs $533.33 a month and $32,000 in all. Taking the rebate with a 6.5% bank loan costs $567.42 a month and $34,045. The rebate wins only if you can borrow below about 3.94%. This comparison leaves out tax and fees.
Get a pre-approval before you shop, so you have a number to compare. The CFPB explains that a dealer's rate is generally the lender's "buy rate" plus extra interest that pays the dealer for arranging the loan. On the $34,075 loan, one extra percentage point costs $978 over 60 months.
What this car loan estimate leaves out
It leaves out insurance, fuel, and upkeep, which you pay on top. The car's value is a rough curve, not a market quote. It assumes a new car loses 20% in year one and 15% a year after, and a used car loses 12% and then 10%. Your real car could do better or worse, so treat the underwater figure as a warning, not a forecast. This tool also subtracts rebates before tax, so check whether your state does the same.
Before you sign, ask for the out-the-door price in writing and compare it with the contract. If you're already behind on a car loan, call your lender early. A nonprofit credit counselor can help you look at your whole budget.
Common questions
How do I calculate my car loan payment by hand?
Use M = P × r(1 + r)^n ÷ ((1 + r)^n − 1). P is the amount financed, r is the annual rate divided by 12, and n is the number of months. For $34,075 at 7.5% over 60 months, r is 0.006250 and the payment is $682.79.
How much does $1,000 more down lower my payment?
About $20.03 a month on this 7.5%, 60-month loan. A larger down payment also shortens the time you could owe more than the car is worth.
Why is the dealer's payment higher than this estimate?
Look for add-ons, fees, or a higher rate in the contract. A $2,000 add-on financed over 72 months at 7.5% adds $34.58 a month and $490 in interest. The FTC says it's fine to say no to add-ons and to ask their price.
Can I pay off my car loan early?
Check your contract first for any charge for paying early. If there's none, an extra $50 a month on the $34,075 loan saves $582 and ends it 4 months sooner. Enter it under "Extra each month" in the advanced options.
Does this work for a used car?
Yes. Choosing Used changes only the value estimate behind the underwater figure. It doesn't change the payment, so enter the rate you were quoted for that car.
Can I get a car payment based on my credit score?
There's no credit score field, because the calculator can't predict the rate a lender will offer. Enter a rate from a real quote, then use the "Rate 2% lower" what-if to see what a better rate would be worth.
Sources
- Financing or leasing a car · Federal Trade Commission
- Auto trade-ins and negative equity · Federal Trade Commission
- What is the difference between dealer-arranged and bank financing? · Consumer Financial Protection Bureau
- What is Guaranteed Asset Protection (GAP) insurance? · Consumer Financial Protection Bureau
- Motor vehicle taxes: frequently asked questions · Texas Comptroller of Public Accounts
- Regulation 1654: Barter, exchange, trade-ins, and foreign currency transactions · California Department of Tax and Fee Administration