Auto Loan Calculator

Q: How much car payment can I afford?

A common guideline is to keep total vehicle costs (payment, insurance, fuel, maintenance) under 15%-20% of take-home pay, with the loan payment itself around 10% or less. The 20/4/10 rule suggests 20% down, a maximum 4-year term, and total car costs under 10% of gross income.

Q: Is sales tax financed in a car loan?

Usually yes — tax, title, and fees are commonly rolled into the amount financed unless you pay them upfront. In most states, sales tax applies to the price after the trade-in credit, which this calculator assumes.

Q: What loan term is best for a car?

Shorter is cheaper: 72- and 84-month loans lower the payment but cost far more interest and keep you underwater (owing more than the car's value) longer. If you need 72+ months to afford the payment, the car is likely beyond budget.

Your real monthly car payment — with sales tax, trade-in credit, down payment, and dealer fees included, not just the sticker price.

Monthly payment

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Amount financed

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Sales tax

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Total interest

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Total cost of vehicle

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How the amount financed is built

Amount financed = Price − Trade-in + Amount owed on trade + Sales tax + Fees − Down payment
Sales tax = (Price − Trade-in) × tax rate (most states credit the trade-in)

Worked example

$35,000 car · $5,000 down · 6.5% tax · $500 fees · 7% APR for 60 months

Tax: 35,000 × 6.5% = $2,275 → financed: 35,000 + 2,275 + 500 − 5,000 = $32,775

Payment: $649/mo · total interest ≈ $6,166

The 20/4/10 rule of thumb

A useful discipline for car buying: put 20% down, finance for no more than 4 years, and keep total car expenses under 10% of gross income. Few buyers hit all three, but each one you meet reduces the odds of being "underwater" — owing more than the car is worth as it depreciates. Watch the long-term trap: at 7%, moving from 60 to 84 months on the example above drops the payment to $495 but raises total interest from $6,200 to about $8,800. Work backward from a payment that fits your budget with the car affordability calculator, or compare leasing with the lease calculator.

Frequently asked questions

How much car payment can I afford?

Keep the payment near 10% of take-home pay and all car costs under 15–20%. The 20/4/10 rule adds 20% down and a 4-year maximum term.

Is sales tax financed in a car loan?

Commonly yes, along with title and fees — and most states charge tax on the price after trade-in credit, as assumed here.

What loan term is best for a car?

The shortest you can comfortably afford. 72–84 month loans cost far more interest and extend the underwater period.

Related calculators

Note: Tax treatment of trade-ins varies by state; fees vary by dealer. Not financial advice. Last reviewed: July 2026.