What goes into a car payment
The amount you finance is: price + sales tax − down payment − trade-in. In many U.S. states sales tax applies to the price after the trade-in value is deducted, which is how this calculator works. Check your state's rule and add fees if your dealer includes them.
Example: a $35,000 car with $5,000 down, 6.5% interest over 60 months finances $30,000 and costs about $586.98 a month.
Shorter or longer term?
Longer terms (72 or 84 months) lower the monthly payment but add a lot of interest, and you may owe more than the car is worth for longer. A larger down payment is the simplest way to cut both the payment and the interest.
Tips before you sign
- Get a pre-approved rate from a bank or credit union to compare with dealer financing.
- Negotiate the price of the car first, then the financing.
- Ask for the total cost of the loan, not only the monthly payment.