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Auto Loan Calculator

Calculate auto loan payments with down payment, trade-in, taxes, and fees

Vehicle Price ($)

Down Payment ($)

Trade-in Value ($)

Sales Tax Rate (%)

Additional Fees ($)

Loan Term (Years)

Annual Interest Rate (%)

Share Finance Calculation

How Auto Loan Calculations Work & Examples

⚡Auto Loan Examples

🔍How it Works

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Auto Loan Payment Formula

M=L×

r(1+r)ⁿ

(1+r)ⁿ-1

Where:

• M = Monthly Payment

• L = Loan Amount (Vehicle Price + Taxes + Fees - Down Payment - Trade Value)

• r = Monthly interest rate (annual rate ÷ 12)

• n = Total number of payments (years × 12)

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Auto Loan Amount Calculation

Loan Amount = Vehicle Price + Sales Tax + Fees - Down Payment - Trade-in Value

• Sales Tax calculated on: (Vehicle Price - Trade-in Value)

• Additional Fees: Documentation, registration, extended warranties

• Total Down: Cash down payment + trade-in credit

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Interest & Payment Breakdown

Each monthly payment covers interest first, then reduces the principal balance.

• Early payments: Mostly interest, small principal reduction

• Later payments: Mostly principal, less interest

• Total Interest: (Monthly Payment × Number of Payments) - Loan Amount

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Auto Loan Considerations

• Down Payment: 10-20% reduces monthly payments and may eliminate gap insurance needs

• Trade-in Value: Reduces taxable amount and loan principal

• Loan Term: Shorter terms (36-48 months) save interest, longer terms (60-84 months) lower payments

• Interest Rates: New cars typically 3-8%, used cars 4-15% depending on age and credit

❓ Frequently Asked Questions

How does down payment affect my auto loan?

A larger down payment reduces the loan amount, resulting in lower monthly payments and less total interest paid. It also helps you avoid being 'upside down' on your loan and may qualify you for better interest rates.

What is the ideal auto loan term length?

While longer terms (72-84 months) offer lower monthly payments, they result in more interest paid overall and higher risk of negative equity. Most financial experts recommend 36-60 month terms for the best balance of payment and total cost.

Should I include taxes and fees in my loan?

Including taxes and fees in your loan means you'll pay interest on these amounts over the life of the loan. If possible, paying these upfront can save money, but financing them may be necessary if you lack sufficient cash.

How does my trade-in value affect the loan?

Trade-in value reduces the amount you need to finance. If you owe more on your current vehicle than its trade value (negative equity), that difference is typically added to your new loan amount.

What factors determine my auto loan interest rate?

Your credit score, loan term, down payment amount, new vs. used car, age of the vehicle, and the lender all affect your rate. New cars typically qualify for lower rates than used cars.

Can I pay off my auto loan early?

Most auto loans allow early payoff without penalty, which can save substantial interest. Check your loan terms for any prepayment penalties before making extra payments or paying off early.

📚 References & Sources