— Loans & Debt
Auto Loan Calculator
Work out your car payment on the amount you actually finance — after down payment, trade-in, tax and fees — and see how long you stay underwater.
Monthly payment
$601.96
- Amount financed
- $30,400
- Total interest
- $5,717.39
- Total loan cost
- $36,117.39
- Total cost incl. taxes & fees
- $38,117.39
- Effective APR
- 10.51%
- Underwater period
- 8 mos
— Amortization schedule
| Year | Payment | Principal | Interest | Balance | Car value |
|---|---|---|---|---|---|
| Year 1 | $7,223.48 | $5,262.18 | $1,961.3 | $25,137.82 | $25,500 |
| Year 2 | $7,223.48 | $5,642.58 | $1,580.9 | $19,495.24 | $21,675 |
| Year 3 | $7,223.48 | $6,050.48 | $1,172.99 | $13,444.76 | $18,423.75 |
| Year 4 | $7,223.48 | $6,487.87 | $735.6 | $6,956.88 | $15,660.19 |
| Year 5 | $7,223.48 | $6,956.88 | $266.59 | $0 | $13,311.16 |
— Loan balance vs car value
Download— How it works
Financed = price − down − trade-in (+ negative equity) + financed taxes/fees; then a standard EMI. Underwater while balance > price × (1 − depreciation)^years.
What you actually finance
A car’s sticker price is rarely what you borrow. Subtract your down payment and any trade-in value, then add the parts that get rolled in — sales tax, registration and dealer fees, and any negative equity from a trade-in you still owe on. The result is the amount financed, and that is what your monthly payment and interest are calculated on. This calculator builds that figure up from the actual inputs rather than the headline price.
Rolling tax and fees into the loan keeps your cash outlay down, but you then pay interest on them for the whole term, which nudges your effective rate above the quoted one — the calculator shows that effective APR when fees are financed.
Worked example — $30,000 car, $2,000 down, 8% tax and $600 fees financed, 7% over 5 years: Financed = (30,000 − 2,000) + 2,400 + 600 = $31,000. Monthly payment ≈ $614, with about $5,830 of interest — and you stay underwater for roughly the first year.
The underwater period
A new car loses value fast — often 15–20% in the first year — while your loan balance falls slowly at first, because early payments are mostly interest. For a while you owe more than the car is worth: you are “underwater”, and if it were written off or you had to sell, you would be left with a shortfall. The chart lays your falling balance over the depreciation curve, and the point where the balance dips below the value is the moment your equity turns positive.
A bigger down payment, a shorter term, or rolling fewer fees into the loan all shrink the underwater period. Financing tax, fees and negative equity does the opposite — it can leave you underwater for years, which is why gap insurance exists.
Trade-ins and negative equity
A trade-in works in your favour: its value comes straight off the amount financed. But if you still owe more on it than it is worth, that shortfall — negative equity — does not disappear; it is added to the new loan. You end up financing part of the old car on top of the new one, which inflates the principal, the interest, and the time you spend underwater on the new vehicle.
The calculator handles both: enter the trade-in value, and separately any balance still owed on it, to see the true effect on what you finance.
— Reader questions
What does “amount financed” include?
The vehicle price, minus your down payment and trade-in value, plus any negative equity from the trade-in and any sales tax or fees you choose to finance rather than pay up front. That total — not the sticker price — is what your payment and interest are based on.
What does “underwater” mean?
You are underwater (or have negative equity) when your loan balance is more than the car is worth. Because cars depreciate quickly and early payments are mostly interest, this is common in the first couple of years — the calculator shows exactly how long it lasts and when your equity turns positive.
Should I finance the sales tax and fees or pay them up front?
Paying up front keeps the loan smaller, so you pay less interest and climb out from underwater sooner. Financing them keeps your initial cash outlay lower but raises the balance, the total interest, and the effective APR. The calculator shows both effects.
How does negative equity on my trade-in hurt me?
If you owe more on your old car than it is worth, that gap is rolled into the new loan. You then pay interest on the old shortfall plus the new car, your payment rises, and you start the new loan deeper underwater. It is usually best to clear negative equity before trading in if you can.
Why is the effective APR higher than the rate I was quoted?
When you finance the tax and fees, you pay interest on them too, so the rate you effectively pay on the car itself is higher than the headline rate. The calculator computes that effective APR so you can compare offers fairly.
How accurate is the depreciation estimate?
It is a smooth annual rate, which is a simplification — real depreciation is steepest right after purchase and varies by make and model. Treat the underwater period as a good guide rather than an exact date, and adjust the rate to match your vehicle.