Your result
What your result means
A $36,000 car with $2,160.00 sales tax and $800 in fees, minus $4,000 down and a $0 trade-in, leaves $34,960.00 to finance. At 7% for 60 months that is $692.25 a month. Interest adds $6,574.98, so the car costs $45,535 all in.
The math
Formula and sources
Financed = price + tax + fees − down − trade-in tax = (price − trade-in) × tax rate M = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)
- M
- monthly principal-and-interest payment
- P
- amount financed
- r
- monthly interest rate = annual rate ÷ 12
- n
- loan term in months
Most states tax the price after the trade-in credit; a few tax the full price. Dealer add-ons such as service contracts increase the amount financed.
Sources we checked this against
- 1How do I compare auto loan offers?Consumer Financial Protection Bureau · consumerfinance.gov
- 2Understanding Vehicle FinancingFederal Trade Commission (via GovInfo) · govinfo.gov
- 3PMT function (payment formula and examples)Microsoft Support · support.microsoft.com
Formula last checked 2026-11-04. Found an error? Tell us and we will fix it.
Step by step
Two worked examples
CFPB: $20,000 at 4.75% over 36 months
Monthly payment
$597.18
- Vehicle price
- $20,000
- Down payment
- $0
- Trade-in value
- $0
- Sales tax
- 0%
- Title, registration & dealer fees
- $0
- Interest rate (APR)
- 4.75%
- Loan term
- 36 months
The CFPB’s comparison table lists $597 a month and $1,498 of interest. We get $597.18 and $1,498.32.
Same loan over 72 months
Monthly payment
$319.78
- Vehicle price
- $20,000
- Down payment
- $0
- Trade-in value
- $0
- Sales tax
- 0%
- Title, registration & dealer fees
- $0
- Interest rate (APR)
- 4.75%
- Loan term
- 72 months
Stretching to six years lowers the payment to $319.78 but interest roughly doubles to $3,024.54 (CFPB: $320 and $3,024).
| Result | Example 1 | Example 2 |
|---|---|---|
| Monthly payment | $597.18 | $319.78 |
| Total interest | $1,498.32 | $3,024.54 |
| Total cost (incl. down & trade-in) | $21,498 | $23,025 |
Questions
Frequently asked questions
How long should a car loan be?
Shorter is cheaper. The CFPB notes that some experts recommend five years or less, because longer loans cost more interest and make it more likely you’ll owe more than the car is worth.
Should I compare the monthly payment or the APR?
Compare the APR, term and amount financed together. A lower payment from a longer term can still cost more in total.
Is it better to get financing before visiting the dealer?
A preapproval from a bank or credit union gives you a rate to compare against the dealer’s offer and makes it easier to negotiate the price separately from the financing.