The number to negotiate is not the payment
The CFPB recommends comparing total loan cost rather than focusing only on the monthly payment. A longer term, a different rate, fees, or add-ons can lower or raise the payment while changing total cost. Use this estimate to reconcile the amount financed and finance charge on the written offer.
How the math works here
The selected state treatment sets the taxable price. Amount financed is vehicle price + sales tax + existing trade payoff − trade-in value − cash down. The payment is standard amortization over the entered term. The vehicle-and-financing figure adds vehicle price, sales tax, and interest on the new loan; title, registration, dealer fees, add-ons, and the principal of an old loan remain separately visible in the contract.
Checks before signing
- Reconcile the amount financed. Compare this estimate with the Truth in Lending disclosure and identify every fee or add-on.
- Separate trade value from payoff. The CFPB warns that rolled negative equity makes the new loan more expensive.
- Compare total loan cost. The CFPB auto-loan guide recommends comparing amount financed plus finance charge, not payment alone.
Method, example, and sources
How this calculator works
The model first determines the taxable vehicle price from the selected trade-in treatment. It adds sales tax and any old-loan payoff, subtracts trade-in value and the cash down payment, and amortizes the remaining amount at the entered annual rate for the selected number of months.
Worked example
For a $35,000 vehicle, $3,000 cash down, a $10,000 trade worth less than its $14,000 payoff, and 7% sales tax, the amount financed is $37,750 when the trade receives a tax credit. Taxing the full vehicle price instead raises that amount to $38,450.
What the estimate leaves out
- Sales-tax rules vary by state and transaction; the two selectable treatments do not determine which rule applies to a purchase.
- Title, registration, documentation charges, dealer add-ons, insurance, rebates, and lender fees are excluded unless already reflected in the entered values.
- The entered annual rate drives a level-payment estimate; the calculator does not derive the contract APR or reproduce every Truth in Lending finance charge.
Primary sources
Frequently asked questions
Is sales tax charged on the full price or after the trade-in?
State rules vary. Some transactions receive a sales-tax credit for the trade-in value, while others tax the full vehicle price. Select the treatment shown on your buyer’s order and enter the quoted local rate; do not alter the vehicle price or trade value to imitate a different tax rule.
What loan term should I choose?
Shorter terms generally cost less in total interest but raise the monthly payment. Longer terms lower the payment while increasing borrowing cost and the risk of owing more than the vehicle is worth. Compare the total interest and amount financed for every offer, not only the monthly payment.
What APR should I expect on a car loan?
It varies with credit history, term, lender, vehicle, and market conditions. Enter actual written quotes rather than a national average. Comparing a bank or credit-union quote with the dealer’s offer gives you a useful benchmark.
Should I finance through the dealer?
Compare the APR, amount financed, finance charge, term, add-ons, and total of payments on each written offer. A promotional rate can be competitive, but a smaller monthly payment may simply come from a longer term or a larger amount financed.
What if I still owe money on my trade-in?
Enter the vehicle’s trade-in value and the existing loan payoff separately. If the payoff exceeds the trade value, the difference is negative equity; when rolled into the new loan, it increases the amount financed and the interest paid. Verify that the old loan is actually paid off after the transaction.