How to Calculate a Car Loan Payment
6 min read · Updated September 26, 2026 · by Thomas M, Registered Investment Adviser (South Carolina)
A car payment depends on much more than the sticker price. This guide builds the payment in three steps — amount financed, monthly payment, total cost — and shows why loan length matters so much.
Step 1: Amount financed
Amount financed = price + sales tax + fees − down payment − trade-in. For a $30,000 car with $3,000 down, a $5,000 trade-in, 6% tax on the net $25,000 ($1,500) and $500 fees: $24,000.00.
Step 2: Monthly payment
Use L × i ÷ (1 − (1 + i)−n). At 6.5% over 60 months: $469.59.
Step 3: Total interest and total cost
Payments × months − amount financed gives interest: $4,175.25. The all-in cost of the car (price, tax, fees, interest) is $36,175.25.
How term length changes it
| Term | Monthly payment | Total interest |
|---|---|---|
| 36 months | $735.58 | $2,480.74 |
| 48 months | $569.16 | $3,319.63 |
| 60 months | $469.59 | $4,175.25 |
| 72 months | $403.44 | $5,047.56 |
| 84 months | $356.39 | $5,936.46 |
A longer term lowers the payment but increases interest and the risk of owing more than the car is worth.
Practice questions
Test yourself, then tap to check. Answers are calculated by the tools linked below.
- A $24,000 car, $2,000 down, no trade-in, 7% tax, $400 fees, 7.2% for 48 months. What is the monthly payment?
Show answer
Monthly payment: $578.86
- A $15,000 car loan at 7.5% over 4 years. What is the payment?
Show answer
Monthly payment: $362.68
- A $10,000 loan at 9.9% for 36 months with a 4% origination fee. What is the APR?
Show answer
Monthly payment: $322.20 · APR (including the fee): 12.73%
Frequently asked questions
How is a car payment calculated?
From the amount financed, the interest rate and the term with the standard amortisation formula.
Is sales tax charged on the trade-in?
In many US states tax applies to price minus trade-in; in others to the full price. Check local rules.
What is the best loan term?
The shortest one you can comfortably afford — usually 48–60 months.
How much should I put down?
About 20% is a common target to offset depreciation.
Try it yourself
Auto Loan CalculatorWork out a car loan’s monthly payment, interest and total cost with down payment, trade-in, sales tax and fees.Loan CalculatorEstimate loan payments and see how extra payments cut interest and time.Personal Loan CalculatorSee the monthly payment, total interest and the true APR of a personal loan including its origination fee.Keep learning
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How to Calculate Percentages7 min readReviewed by Thomas M, Registered Investment Adviser (South Carolina), who launched his own financial advisory firm in 2010. Spot a mistake? Tell us. See our editorial policy. Finance content is educational and not financial advice; see the disclaimer.