Auto Loan Calculator (United States)
Buying a financed car in the United States has two quirks that change the math quite a bit versus an ordinary loan: the sales tax, which varies by state and county, and the trade-in, the used car you hand over as part of the payment. In most states the trade-in not only lowers what you finance, but also the base on which the tax is computed, so handing over your old car has a double tax benefit. This calculator builds the amount you will actually finance — price plus tax, minus down payment and minus trade-in — and gives you the monthly payment, the total interest and how much sales tax you pay.
Monthly payment
Amount financed:
Sales tax
Total interest
Rough estimate. Sales tax is computed on the price minus the trade-in (the rule in most states; some tax the full price). It excludes title, registration, dealer fees and insurance. The APR should include the finance charges. Check your state and county rate. This is not financial advice.
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How it works
The calculation starts with the sales tax. In most states it applies to the vehicle price minus the trade-in value: if you buy a USD 35,000 car and trade in a used one worth USD 8,000, the tax is computed on USD 27,000, not on USD 35,000. At a 6% rate, that is USD 1,620 of sales tax. Then the amount financed is built: price (35,000) plus tax (1,620), minus the down payment and minus the trade-in (8,000). On that amount financed, with the annual rate (APR) and the term in months, the monthly payment is computed with the standard amortization formula. The total interest is what you pay on top over the life of the loan: the sum of all payments minus the amount financed. Shortening the term raises the payment but cuts the total interest; raising the down payment or the trade-in lowers both.
How the trade-in reduces the tax you pay
The trade-in tax advantage is one reason it can pay to sell your used car to the dealer rather than privately, even if they offer a bit less. In most states the sales tax is charged on the net price (price − trade-in), so every dollar of trade-in saves you its share of tax. This example shows it on a USD 35,000 car at a 6% rate:
| Item | No trade-in | With USD 8,000 trade-in |
|---|---|---|
| Taxable base | USD 35,000 | USD 27,000 |
| Sales tax (6%) | USD 2,100 | USD 1,620 |
| Tax saved | — | USD 480 |
| Amount to finance (no down) | USD 37,100 | USD 28,620 |
Sales tax varies a lot by state
There is no single sales tax in the United States: each state sets its own and many counties and cities add a local surcharge, so the effective rate on a car can run from 0% to over 10%. Five states charge no state sales tax (Oregon, Montana, New Hampshire, Delaware and Alaska, though Alaska allows local rates); at the other end, with combined state + county + city taxes, some jurisdictions top 10%. That is why the calculator asks for the rate: enter the one for where you will register the car, which is not always where you buy it. Besides, the tax is usually computed on the price after manufacturer discounts and incentives, but before finance charges. Two jurisdictions with the same sticker price can leave you with quite different payments just from the sales tax.
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Preguntas frecuentes
- Does the trade-in lower the tax I pay?
- In most states, yes. The sales tax is computed on the car price minus the trade-in value, so handing over your used car reduces the taxable base and you pay less tax. With a USD 35,000 car and an USD 8,000 trade-in, you are taxed on USD 27,000. A few states tax the full price without deducting the trade-in; check your state's rule.
- How much is the sales tax in my state?
- It varies a lot. Five states charge no state sales tax, and in the rest the combined state, county and city rate can run from around 3% to over 10%. It also applies based on where you register the car, not always where you buy it. Enter your jurisdiction's effective rate in the calculator; if you do not know it, your state tax department publishes it.
- What is the "amount financed"?
- It is the amount you actually pay interest on. It is built by adding the car price and the sales tax, and subtracting the down payment and the trade-in value. The more you put down or trade in, the lower the amount financed and therefore the lower the payment and the total interest.
- Is a longer term worth it to lower the payment?
- It lowers the payment, but you pay more total interest and take longer to reach positive equity (the car being worth more than you owe). Auto loans of 72 or 84 months are increasingly common precisely because they lower the payment, but a car depreciates fast: with long terms it is easy to end up "underwater", owing more than it is worth. The calculator lets you compare terms to see the real cost.
- Does this calculator work outside the United States?
- The loan part (payment, interest) is universal, but the sales tax and the tax-discounted trade-in are specific to the US market. In other countries the car VAT usually works differently and the used car does not always reduce the taxable base. If you are outside the US, put 0 in the sales tax and use only the financing part, or look for the generic auto loan calculator.