How is the monthly auto loan payment calculated?

The monthly payment uses the standard amortization formula: P = L * c * (1+c)^n / ((1+c)^n - 1), where L is the financed amount, c is the monthly interest rate (annual APR divided by 12), and n is the number of months. The financed amount is the vehicle price plus sales tax and fees, minus down payment and trade-in.

What payment-to-income ratio is safe for a car loan?

A common rule is to keep your auto payment under 10% of gross monthly income, with total vehicle costs (payment + insurance + gas + maintenance) under 15-20%. This calculator flags anything over 15% of your monthly income as a warning to reconsider the loan term, down payment, or vehicle choice.

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Auto Loan Calculator

Estimate your monthly car payment, total interest, total cost of ownership, and amortization. Includes trade-in, sales tax, fees, and a payment-to-income check.

Estimate only. Actual loan terms depend on credit score, lender, dealer fees, gap insurance, and add-ons. Use this as a planning tool before you walk into a dealership.

Loan inputs

Enter your purchase details. Numbers recalculate as you type. Default values show a typical $35k vehicle with $5k down at 6.5% over 60 months.

Vehicle price Down payment Trade-in value Interest rate (APR %) Loan term (months) Sales tax rate (%) State fees / registration Monthly gross income (optional)

Tax on full price (CA/IL-style) — uncheck for trade-in tax credit

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Amortization (first 12 months + every 12 months)

Month	Payment	Principal	Interest	Balance

How this is calculated

Sales tax = either (vehicle price) x tax rate, or (vehicle price − trade-in) x tax rate, depending on your state. Toggle "Tax on full price" if you live in CA, IL, or similar.
Financed amount = vehicle price + sales tax + state fees − down payment − trade-in. This is what the loan is actually written for.
Monthly payment uses the standard PMT formula: P = L x c x (1+c)^n / ((1+c)^n − 1), where L is the financed amount, c is APR divided by 12, and n is the number of months.
Total interest = (monthly payment x months) − financed amount. Total cost = total of payments + down payment + trade-in (since the trade-in is value you're giving up).
Payment-to-income ratio = monthly payment / gross monthly income. Under 10% is comfortable, 10-15% is a stretch, over 15% is flagged as risky.

FAQ

How is the monthly payment calculated?

Standard amortization: P = L x c x (1+c)^n / ((1+c)^n − 1). L is the loan amount, c is the monthly rate (APR ÷ 12), n is the loan term in months. Every month, part of your payment is interest (calculated on the remaining balance) and part is principal.

What is "tax on difference" vs "tax on full price"?

In most states, sales tax applies only to (vehicle price − trade-in), so trading in a $10k car on a $30k purchase taxes you on $20k. In CA, IL, MI, KY, MD, MN, VA, and a handful of others, sales tax applies to the full vehicle price regardless of trade-in. Toggle the "Tax on full price" box if you live in one of those states.

What payment-to-income ratio is safe?

Under 10% of gross monthly income is comfortable. 10-15% is a stretch but workable if other expenses are low. Over 15% is risky — once you add insurance, gas, and maintenance, total vehicle cost can easily eat 25%+ of income. We flag anything above 15% as a warning.

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