How this number is made
A car payment is the installment payment on what you actually finance: price, minus cash down and the trade-in, plus tax and any fees you roll into the note. The term is in months because auto loans are quoted that way.
- Use the price you agreed to, not the sticker you started from.
- Put the trade-in in its own field. It is not the same thing as cash down.
- Type the tax rate the dealer will use. A general statewide sales-tax chart is often wrong for vehicles.
Formula
Tax = (price − trade-in) × tax rate. Loan = price − trade-in − down payment + tax + fees. Payment is that loan amortized monthly over the term.
Worked example
A $32,000 car with a $2,000 trade-in, $3,000 down, 6% tax, and $500 of fees is a $29,300 loan. At 6.9% for 60 months the payment is $578.79. Interest over the loan is about $5,428.
Questions
Can I use this for a personal loan?
Yes, if you set tax, trade-in, and fees to zero and type the amount you will borrow as the price. The payment math is the same.
Where is the dealer’s add-on insurance?
Not included unless you type it into fees. GAP, warranties, and doc fees change the loan only if you finance them. Paying them in cash keeps them out of the interest.