APR Desk
APR Desk · Auto loan

Auto loan calculator

Tax and trade-in before the payment

An auto loan calculator has to start before the principal. The amount you finance is not the sticker price. It is the price, minus cash down, minus a trade-in, plus sales tax and fees. This page uses one explicit tax rule: sales tax applies to the price minus the trade-in. States do not all do it that way, so check the rule you actually pay, then change the inputs if your state taxes the price before the trade.

Inputs

Result

Enter the vehicle price, cash down, and the term.

Disclaimer: An estimate, not a credit offer. Sales tax here is (price − trade-in) × the rate you enter. Your state may tax a different base.

The loan does not include gasoline. Price a drive on the ClearQuip trip gas cost calculator.

How to use

  1. Enter the price you would pay for the vehicle, before tax.
  2. Enter cash down and the trade-in allowance. Use zero if you have neither.
  3. Enter the sales-tax percent and any fees you will finance, such as a title fee you are not paying in cash. Set tax to zero if the price you typed is already out-the-door.
  4. Enter APR and term, then Calculate. The payment uses the amount financed, not the sticker.

How it's calculated

Tax = max(0, price − trade-in) × tax rate
Amount financed = price − down payment − trade-in + tax + fees
Payment = standard amortizing payment on that amount

The payment formula is the same monthly formula as every other loan on APR Desk. What is different is the principal. Trade-in reduces both the amount financed and, under the assumption on this page, the taxable amount. A down payment reduces the amount financed and does not reduce the tax. Fees are added in full.

Fuel for the same car is not a loan. The ClearQuip trip gas cost calculator prices a drive from distance and miles per gallon. Two lender offers, once you know the amount financed, can also go on the loan comparison.

Worked example

A $30,000 vehicle, $3,000 down, no trade-in, 6 percent sales tax, and no fees finances 30,000 − 3,000 + 1,800 = $28,800. At 5 percent APR for 60 months the payment is $543.49. Interest over the term is the part of the payments above $28,800. Add a trade-in and both the tax and the principal fall, using the rule above.

Assumptions and sources

Sales tax equals the tax rate times price minus trade-in, and never less than zero. That matches some states and not others. If your state taxes the full price, set the trade-in to zero for the tax step by putting the trade-in into the down-payment field instead, and accept that the label will say down payment. The 60-month example payment is the amortizing formula at 5 percent on $28,800. No dealer participation or add-on product is included unless you typed it into fees.

FAQ

Does a trade-in lower the tax?

On this page, yes: tax is charged on price minus trade-in. If your state taxes the full price, do not use the trade-in field for the tax reduction; add the trade-in to cash down instead.

What goes in fees?

Amounts you will finance on top of the price, such as a title or documentation fee you are not paying in cash. Do not also bury them in the price.

Why is the payment based on less than the price?

Cash down and trade-in are not borrowed. Tax and financed fees are borrowed. The payment uses only the borrowed part.

Can I compare 48 months and 72 months?

Run the form twice, or copy the amount financed into the loan comparison and enter both terms there.

Related tools