How a car payment is calculated
Most U.S. states charge sales tax on the price after the trade-in is subtracted, which is what this calculator does. A few states, including California, tax the full price.
Example: a $32,000 car with $4,000 down, 6.5% tax and $500 in fees finances $30,580. At 7.2% for 60 months the payment is about $608 a month.
Longer terms lower the payment but raise total interest, and can leave you owing more than the car is worth. Add fuel to the picture with the fuel cost calculator.
Car payment by loan amount and term
Monthly payment on the amount financed at 7% APR, after your down payment, trade-in, tax and fees are worked out:
| Financed | 36 mo | 48 mo | 60 mo | 72 mo | 84 mo |
|---|---|---|---|---|---|
| $20,000 | $618 | $479 | $396 | $341 | $302 |
| $25,000 | $772 | $599 | $495 | $426 | $377 |
| $30,000 | $926 | $718 | $594 | $511 | $453 |
| $35,000 | $1,081 | $838 | $693 | $597 | $528 |
| $40,000 | $1,235 | $958 | $792 | $682 | $604 |
| $50,000 | $1,544 | $1,197 | $990 | $852 | $755 |
What a longer loan costs
The same $35,000 at 7% APR over different terms:
| Term | Monthly payment | Total interest | Total paid |
|---|---|---|---|
| 48 months | $838.12 | $5,230 | $40,230 |
| 60 months | $693.04 | $6,583 | $41,583 |
| 72 months | $596.72 | $7,963 | $42,963 |
| 84 months | $528.24 | $9,372 | $44,372 |
Going from 60 to 84 months cuts the payment by $165 a month but adds $2,790 in interest. Lenders also tend to charge higher rates on longer terms, which widens the gap.
Frequently asked questions
What is a good rule for how much car I can afford?
A common guideline is 20/4/10: put 20% down, finance for no more than 4 years, and keep total car costs under 10% of gross income.
Is 72 or 84 months too long?
Long loans cost much more interest and cars lose value faster than the balance falls. If you need 72 months or more to afford the payment, a cheaper car is usually the safer choice.
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