Financing a new or used vehicle involves more than just the sticker price. Our Auto Loan Amortization Calculator helps you visualize the true cost of car ownership by factoring in trade-in values, sales tax, down payments, and interest rates.
Key Factors Affecting Your Monthly Payment
Vehicle Price: The negotiated selling price of the car before fees.
Trade-In Value: Deducting the value of your current vehicle reduces the loan principal. In many states, this also reduces the amount of sales tax you pay.
APR (Annual Percentage Rate): Your interest rate is determined by your credit score and current market conditions. Even a 1% difference can save you hundreds of dollars over the life of the loan.
Loan Term: While a 72 or 84-month loan lowers your monthly payment, it significantly increases the total interest paid.
The Math Behind the Calculation
Auto loans typically use a simple amortization formula. The core calculation determines your monthly payment based on the amount financed, the monthly interest rate, and the number of months in the term.
Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
M: Total monthly payment
P: Principal loan amount (Price + Tax – Down Payment – Trade In)
i: Monthly interest rate (APR / 12)
n: Number of months
How Sales Tax Impacts Your Loan
Sales tax is often a surprise cost for car buyers. In this calculator, we apply the sales tax rate to the difference between the Vehicle Price and the Trade-In Value, which is the standard taxation method in most U.S. states. This "tax credit" for trading in a vehicle can save you a substantial amount of money upfront.
Tips for Lowering Your Auto Loan Payment
Increase your down payment: Aim for at least 20% down to avoid "gap" insurance requirements and lower your monthly burden.
Shorten the term: If you can afford the higher monthly payment of a 48-month loan, you will build equity faster and pay less interest.
Shop for rates: Don't just accept the dealer's financing. Check with local credit unions which often offer lower APRs for auto loans.
function calculateCarLoan() {
// 1. Get Input Values
var price = parseFloat(document.getElementById('vehiclePrice').value);
var downPayment = parseFloat(document.getElementById('downPayment').value);
var tradeIn = parseFloat(document.getElementById('tradeInValue').value);
var taxRate = parseFloat(document.getElementById('salesTax').value);
var interestRate = parseFloat(document.getElementById('interestRate').value);
var months = parseInt(document.getElementById('loanTerm').value);
// 2. Validate Inputs (Handle NaN / Empty defaults)
if (isNaN(price)) price = 0;
if (isNaN(downPayment)) downPayment = 0;
if (isNaN(tradeIn)) tradeIn = 0;
if (isNaN(taxRate)) taxRate = 0;
if (isNaN(interestRate)) interestRate = 0;
if (isNaN(months)) months = 60; // Default fallback
// 3. Logic: Calculate Taxable Amount
// In most states, tax is applied to Price minus Trade-In
var taxableAmount = price – tradeIn;
if (taxableAmount < 0) taxableAmount = 0;
var taxAmount = taxableAmount * (taxRate / 100);
// 4. Logic: Calculate Amount Financed (Principal)
// Principal = (Price + Tax) – DownPayment – TradeIn
// Or simpler: (Price – TradeIn + Tax) – DownPayment
var principal = (price + taxAmount) – downPayment – tradeIn;
// Edge case: If down payment covers everything
if (principal 0) {
if (interestRate === 0) {
// Simple division if 0% APR
monthlyPayment = principal / months;
totalInterest = 0;
} else {
// Standard Amortization Formula
var monthlyRate = (interestRate / 100) / 12;
// M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var x = Math.pow(1 + monthlyRate, months);
monthlyPayment = (principal * x * monthlyRate) / (x – 1);
totalInterest = (monthlyPayment * months) – principal;
}
}
// 6. Calculate Totals
var totalCost = price + taxAmount + totalInterest; // Total out of pocket cost considering original price
// OR Total Cost to buyer = Down Payment + Trade Value + (Monthly * Months).
// Let's define Total Cost for the user as: Total Payments + Down Payment + Trade In Value.
var totalPaid = (monthlyPayment * months) + downPayment + tradeIn;
// 7. Update the UI
document.getElementById('monthlyPaymentResult').innerHTML = "$" + monthlyPayment.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('financedAmountResult').innerHTML = "$" + principal.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('totalInterestResult').innerHTML = "$" + totalInterest.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('totalCostResult').innerHTML = "$" + totalPaid.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('salesTaxResult').innerHTML = "$" + taxAmount.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
// Show results box
document.getElementById('resultsArea').style.display = "block";
}