Calculate the Real Price of Your Next Car
How the Calculation Works
Method Used
This tool calculates your estimated monthly car payment using a standard amortized loan formula. It considers the amount you are financing (vehicle price plus sales tax, minus any down payment and trade-in value), along with your annual interest rate and the total number of months in your loan term.
Monthly Payment Equation
M = P × [ r(1 + r)ⁿ ] / [ (1 + r)ⁿ − 1 ]
Where:
- M = Monthly payment amount
- P = Loan principal (the amount borrowed)
- r = Monthly interest rate (APR ÷ 12 ÷ 100)
- n = Number of monthly payments
How Your Payment Is Calculated
- Sales tax is added to the listed vehicle price
- Down payment and trade-in value are deducted
- APR is converted into a monthly interest rate
- The amortization formula is applied to find the monthly payment
- Monthly payment × number of months = total cost of the loan
- Total interest is determined by subtracting the principal from the total cost
Sources & Standards
- Uses the same amortization method applied by banks and auto lenders
- Follows established compound-interest principles
- Structured in line with general Truth in Lending Act (TILA) transparency guidelines
Disclaimer
This tool provides estimates only. Your actual rate, lender fees, and final monthly payment may differ based on your credit profile and the policies of the financial institution you choose.