Auto Loan Calculator

Amount financed = price + sales tax + fees - down payment - trade-in equity, where equity is the trade-in value less anything still owed on it. Sales tax is charged on the price after the trade-in in most states, which is what makes a trade-in worth slightly more than its sticker value. The payment is then the standard amortized formula on whatever is left to finance.

Does a trade-in really save me sales tax?

In most states, yes. Tax is charged on the difference, so a 10,000 trade-in in a 6 percent state saves 600 in tax on top of its value. California, Michigan and Virginia are among the states that tax the full price instead.

What is negative equity and why is it a problem?

It is owing more on your current car than it is worth. Rolling it into the next loan means borrowing more than the new car costs, so you start underwater and stay there longer. It is the most common reason a seven year auto loan exists.

Is a 72 or 84 month car loan a bad idea?

Usually. The payment looks manageable, but cars depreciate faster than these loans amortize, so you spend years owing more than the car is worth. If the only way to afford a car is to stretch past 60 months, the honest read is that it is the wrong car.

Should I take the dealer financing or the rebate?

Run both. A 0 percent offer instead of a 2,000 rebate is worth taking only if the interest you avoid beats 2,000, which depends on your loan size and the rate you would otherwise get. On smaller loans the rebate usually wins.