Car Payment Calculator with Trade

Enter Vehicle and Loan Details

Understanding Your Car Payment Calculation

This calculator helps you estimate your monthly car payments by factoring in the car's price, your down payment, the value of your trade-in vehicle, the loan term, and the annual interest rate. A trade-in can significantly reduce the amount you need to finance, potentially lowering your monthly payments.

How It Works: The Math Behind the Calculator

The calculation involves determining the net loan amount first, and then applying the standard loan amortization formula.

1. Calculate the Net Loan Amount:

   This is the total amount you need to borrow after accounting for all upfront costs and credits.

   Net Loan Amount = Car Price - Down Payment - Trade-In Value

   If the trade-in value plus down payment exceeds the car price, the net loan amount would be zero, and thus the monthly payment would be zero.

2. Calculate the Monthly Interest Rate:

   The annual interest rate needs to be converted to a monthly rate.

   Monthly Interest Rate (i) = Annual Interest Rate / 100 / 12

3. Calculate the Total Number of Payments:

   The loan term in years is converted into months.

   Number of Payments (n) = Loan Term (Years) * 12

4. Apply the Loan Amortization Formula:

   The standard formula to calculate the monthly payment (M) for an amortizing loan is:

   M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]

   Where:

   • P = Principal Loan Amount (Net Loan Amount)
   • i = Monthly Interest Rate
   • n = Total Number of Payments

   If the Net Loan Amount (P) is 0 or less, the monthly payment is $0.00.

Factors to Consider:

• Interest Rate: A lower interest rate means lower overall interest paid and a lower monthly payment. Your credit score significantly impacts this.
• Loan Term: A longer loan term will result in lower monthly payments but higher total interest paid over the life of the loan. A shorter term means higher monthly payments but less interest paid overall.
• Trade-In Value: Ensure your trade-in's valuation is fair. A higher trade-in value directly reduces the amount you need to finance.
• Fees: This calculator does not include potential dealer fees, taxes, registration, or other add-ons, which will increase the total cost of the vehicle and potentially your loan amount.

Use Cases:

• Budgeting: Determine affordability before visiting a dealership.
• Negotiation: Understand how much your trade-in impacts the deal.
• Comparison Shopping: Compare financing offers from different lenders or dealerships.

Disclaimer: This calculator provides an estimate for informational purposes only. Actual loan terms and payments may vary. Consult with a financial advisor or lender for precise figures.

function calculateCarPayment() { var carPrice = parseFloat(document.getElementById("carPrice").value); var downPayment = parseFloat(document.getElementById("downPayment").value); var tradeInValue = parseFloat(document.getElementById("tradeInValue").value); var loanTermYears = parseInt(document.getElementById("loanTerm").value); var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value); var resultElement = document.getElementById("result"); // Input validation if (isNaN(carPrice) || carPrice < 0) { resultElement.innerHTML = "Invalid car price."; return; } if (isNaN(downPayment) || downPayment < 0) { downPayment = 0; // Treat as 0 if invalid } if (isNaN(tradeInValue) || tradeInValue < 0) { tradeInValue = 0; // Treat as 0 if invalid } if (isNaN(loanTermYears) || loanTermYears < 1) { resultElement.innerHTML = "Loan term must be at least 1 year."; return; } if (isNaN(annualInterestRate) || annualInterestRate < 0) { resultElement.innerHTML = "Annual interest rate cannot be negative."; return; } var netLoanAmount = carPrice - downPayment - tradeInValue; // If net loan amount is zero or negative, no payment is due if (netLoanAmount <= 0) { resultElement.innerHTML = "$0.00No loan required."; return; } var monthlyInterestRate = annualInterestRate / 100 / 12; var numberOfPayments = loanTermYears * 12; var monthlyPayment = 0; if (monthlyInterestRate > 0) { // Standard amortization formula monthlyPayment = netLoanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) - 1); } else { // If interest rate is 0, payment is just principal divided by months monthlyPayment = netLoanAmount / numberOfPayments; } // Format the result to two decimal places var formattedMonthlyPayment = monthlyPayment.toFixed(2); resultElement.innerHTML = "$" + formattedMonthlyPayment + "per month"; }