Auto loan calculator with sales tax

Why the sticker price is not what you finance

The amount financed is usually the price, plus sales tax, plus title, registration and documentation fees, minus your down payment and trade-in. On a $30,000 car at 7.5% tax, the tax alone adds about $2,250, and you pay interest on it for the life of the loan if you roll it in.

Tax rates combine state, county and sometimes city or district rates, so the figure on your bill can be higher than the state rate you see quoted. Look up the exact combined rate for where you register the car.

Paying tax and fees in cash

Paying tax and fees at signing keeps the loan smaller. If you do finance them, treat the interest as an extra cost of the tax: at 7% over 60 months, every $1,000 of tax financed costs about $190 in interest.

$30,150 financed: payment by loan length

At 7% APR, financing $30,150 (the $30,000 price plus 7.5% sales tax and $900 in fees minus $3,000 down) costs $597.01 a month over 60 months and $455.04 over 84 months. The longer loan lowers the payment by $141.97 but adds $2,403 in interest. Going the other way, 36 months raises the payment to $930.94 and cuts total interest to $3,364.

How the interest rate changes a 5-year loan

On the same $30,150 over 5 years, each full percentage point of APR moves the payment by about $14.32 and total interest by about $860. Rates depend on your credit score, the loan term and whether the car is new or used, so get a pre-approval from a bank or credit union before you walk into a dealership.

What a bigger down payment does

A down payment reduces what you finance, which cuts both the payment and the interest, and it protects you from owing more than the car is worth early in the loan, when new cars depreciate fastest. Here is the same $30,000 car at 7% over 5 years with different down payments.

Paying extra

Adding $100 a month to this loan would pay it off 10 months sooner and save $973 in interest, as long as your lender applies extra money to principal and charges no prepayment penalty. Ask before you start.

Can you afford a $30,000 car?

A common rule of thumb, the 20/4/10 guideline, suggests 20% down, a term of at most 4 years and total car costs under 10% of gross income. On payment alone, $597.01 a month points to a gross income of roughly $71,600 a year to stay at 10%, before insurance, fuel and maintenance. This loan departs from the guideline because the down payment is 10% rather than 20% and the term of 60 months is longer than 48, so the payment is lower than a stricter plan would give but the loan costs more overall.

Will you owe more than the car is worth?

New cars commonly lose around 20% of their value in the first year and roughly 15% a year after that, though this varies by model. Using that rough rule on a $30,000 car, you would likely owe more than the car is worth until about year 2. Gap insurance can cover the difference if the car is totaled while you are underwater.