Overview

The Auto Loan Calculator is designed to assist in calculating car loans for vehicle purchases, primarily in the U.S. While people outside the U.S. can also use the calculator, adjustments may be necessary based on local tax and financing regulations. For those with only the monthly payment amount available, the “Monthly Payments” tab (reverse loan calculator) can help estimate the original vehicle price and other loan details.

Comprehensive Car Loan Calculator

Enter vehicle details, financing terms, and optional extras. Compare scenarios, view charts, and export results—all from one place.

Base price + included taxes/fees if rolled in.
Check to compare against another scenario.

Auto Loans: How They Work

Auto loans are secured loans used for car purchases, typically lasting 36, 60, 72, or 84 months in the U.S. Borrowers make monthly payments that include principal and interest. Failure to repay may result in the lender repossessing the car.

Types of Auto Loan Financing

Direct Lending vs. Dealership Financing

  1. Direct Lending:
    Borrowers secure loans from banks, credit unions, or financial institutions before visiting the dealership. This provides more negotiation power and allows buyers to compare interest rates.
  2. Dealership Financing:
    Financing is arranged through the dealer, often via a captive lender associated with the car manufacturer. While convenient, it may limit rate shopping options. However, manufacturers frequently offer promotional deals, such as interest rates as low as 0% or cash rebates.

Vehicle Rebates

Rebates are financial incentives offered by car manufacturers to lower the purchase price. In some states, rebates are taxed based on the original vehicle price, while others exclude them from taxable amounts.

States that do not tax rebates include Alaska, Delaware, Montana, Oregon, and New Hampshire. For example, a $50,000 car with a $2,000 rebate may have sales tax calculated on $50,000 in taxed states but on $48,000 in untaxed states.

Associated Fees

Auto purchases often involve additional costs beyond the vehicle price. These fees can be financed or paid upfront:

  • Sales Tax: Most states charge sales tax, though some, like Oregon and Montana, do not.
  • Document Fees: Cover the processing of vehicle title and registration paperwork.
  • Title and Registration Fees: Charged by states for issuing the title and registering the vehicle.
  • Advertising Fees: Dealers may include fees for regional advertising campaigns.
  • Destination Fee: Covers vehicle shipment to the dealership, typically $900–$1,500.
  • Insurance: Full coverage insurance is usually required when financing a vehicle.

Auto Loan Strategies

1. Preparation

Research and plan your budget before visiting a dealership. Having a preapproval for an auto loan ensures better negotiation power and helps avoid overspending.

2. Credit Management

A strong credit score can help secure better interest rates and terms. Improving your credit before applying for a loan can save money in the long run.

3. Cash Rebates vs. Low Interest

When offered a choice between a cash rebate and a low-interest rate, weigh the options carefully. While a rebate reduces the purchase price upfront, a lower rate can save on interest over time.

4. Early Payoff

Paying off a loan early reduces interest costs, but some lenders charge penalties. Review the loan terms before committing.

5. Alternative Options

  • Consider pre-owned cars to avoid steep depreciation costs.
  • Leasing may be suitable for those wanting lower upfront costs or frequent upgrades.
  • Public transportation, biking, or carpooling can be practical alternatives.

Buying with Cash

Paying cash for a car eliminates loan interest and monthly payments, offering:

  • Cost Savings: Avoid interest charges entirely.
  • Flexibility: Full ownership allows unrestricted use or resale.
  • Budget Control: Cash purchases limit overspending, unlike loans that may encourage stretching budgets.

However, low-interest financing might be preferable for those with investment opportunities or credit-building goals.

Trade-In Value

Trading in a vehicle can reduce the cost of a new car. In most states, sales tax is calculated based on the new car price minus the trade-in value.

For example:

  • With Tax Reduction: ($50,000 - $10,000 trade-in) × 8% = $3,200 sales tax.
  • Without Tax Reduction: $50,000 × 8% = $4,000 sales tax.

States like California, Michigan, and Virginia do not offer tax reductions for trade-ins, so private sales may yield better financial outcomes in these areas.

Considerations for Financing

While most U.S. car purchases involve loans, financing may not always be the best choice. Assess your financial goals,