Auto Loan Calculator

How much car can you really afford?

Buying a car is exciting, but the math behind it can get complicated quickly. Unlike a mortgage where the price is somewhat fixed, a car purchase has many moving parts: the sticker price, the trade-in value, sales tax, doc fees, and the interest rate.

Our Auto Loan Calculator helps you visualize how these variables impact your monthly wallet. Just because a dealer says you can afford the monthly payment doesn't mean you can afford the total cost of the car.

The "Out-the-Door" Price vs. Sticker Price

The biggest mistake car buyers make is negotiating based on the monthly payment. Dealers love this because they can extend the loan term (from 60 to 84 months) to lower your payment while charging you thousands more in interest.

You should always focus on the Out-the-Door (OTD) Price. This includes:

• Vehicle Price: The negotiated cost of the car.
• Sales Tax: A significant cost (6% to 10% depending on your state).
• Documentation Fees: Usually non-negotiable dealer fees.
• Registration: State tag and title fees.

Understanding the "Trade-In" Tax Benefit

One major advantage of trading in your old vehicle at the dealership (vs. selling it privately) is the Sales Tax Credit.

Loan Term: The 60/20/4 Rule

Car loans are getting longer. 72-month (6 year) and 84-month (7 year) loans are now common. While these lower your monthly payment, they keep you "underwater" (owing more than the car is worth) for years.

Financial experts recommend the 20/4/10 Rule:

• 20% Down: Pay at least 20% upfront to avoid being underwater immediately.
• 4 Years: Keep the loan term to 48 months (or maximum 60 months).
• 10% of Income: Total car expenses (payment + insurance + gas) should not exceed 10% of your monthly gross income.

Interest Rates: New vs. Used

Your interest rate (APR) depends heavily on your credit score, but also on the car itself. New cars generally qualify for lower interest rates ("subvented rates" from manufacturers like 0.9% or 2.9%). Used cars carry higher risk for the bank, so rates are typically 2% to 4% higher than new car rates.

What fits your budget?

Use the calculator above to experiment. Try increasing your Down Payment to see how much interest you save. Try shortening the Loan Term to see how quickly you can own the car outright.