Car Payment Calculator
Calculate your monthly auto loan payment, total cost of ownership, and Texas sales tax
What this result means
Adjust the inputs above to see the analysis.
Principal vs interest
Balance and interest over the term
Amortization by year
How this is calculated
The term input is months (as dealers quote it); the schedule amortizes month by month on the amount after your down payment, trade-in, sales tax and fees.
- Trade-in value reduces both the taxable price and the amount financed.
- Set your local sales-tax rate (defaults are 0, so nothing is invented for you); title, registration and dealer fees are financed too.
Numbers you can check
$30,000 financed at 7.2% for 60 months:
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Understanding Auto Loans: A Complete Guide
How Auto Loan Interest Works
Auto loans use simple interest calculated on the remaining principal balance. Each monthly payment is split between interest and principal — early payments are heavily weighted toward interest. A 6% rate on a $30,000 loan means about $150 of your first payment goes to interest and only about $393 goes to principal. By the final payment, nearly all of it reduces principal.
The formula used by this calculator: M = P × [r(1+r)n] / [(1+r)n - 1] where M = monthly payment, P = loan amount, r = monthly rate, n = total months.
Calculate a car payment in Texas
Texas buyers pay vehicle sales tax of 6.25% at the state level, plus up to 2% in local option tax - a combined cap of 8.25%. The tax is charged on the purchase price after any dealer trade-in credit, and it can be rolled into the loan if your lender's loan-to-value limit allows. Licensed dealers may charge a documentation fee capped at $225 for new vehicles and $185 for used vehicles. Texas has no annual personal property tax on vehicles; budget instead for registration (about $51 plus a $1.50 inspection fee for most counties).
How to calculate a car payment in Texas: take the vehicle price, add sales tax (your county's rate sits between 6.25% and 8.25%), add the doc fee and registration, subtract your trade-in credit and down payment - that total is the principal to enter above. At a 7% APR over 60 months, every $1,000 of tax rolled into the loan adds roughly $20 to the monthly payment.
New vs Used Car Rates Comparison
Key insight: A 2-3 year old used car typically costs 20-30% less than the same model new, with most of the depreciation already absorbed by the first owner. This is the sweet spot for value-conscious buyers.
Total Cost of Ownership: Beyond the Monthly Payment
The monthly payment is just one part of car ownership costs. Factor in these additional expenses:
- Insurance — $1,200-$3,600/year for full coverage. Newer and sportier cars cost more to insure.
- Depreciation — The biggest hidden cost. A $40,000 car loses $8,000-$12,000 in year one alone.
- Maintenance — $500-$1,500/year average. Older cars cost more; luxury brands cost significantly more.
- Fuel — $1,200-$3,000/year depending on mileage and fuel efficiency. Electric vehicles reduce this to $300-$600/year.
- Registration and taxes — Varies by state, typically $200-$800/year.
A $35,000 car with a $600/month payment actually costs closer to $900-$1,000/month when all ownership costs are included.
Tips for Getting the Best Auto Loan Rate
- Get pre-approved before dealership shopping — Credit unions and online lenders often beat dealer financing by 0.5-1.5%. A 1% rate difference on a $30,000 loan saves $900 over 5 years.
- Improve your credit score — Scores above 700 get the best rates. Pay down credit cards and avoid new credit applications 3-6 months before buying.
- Make a larger down payment — 20% down eliminates negative equity risk and may qualify you for better rates. Put at least 10% down to avoid being "upside down."
- Choose a shorter loan term — 48-60 months is optimal. 72-84 month loans have higher rates and you pay thousands more in interest. A $30,000 loan at 6% costs $4,800 in interest over 60 months vs $7,200 over 72 months.
- Consider certified pre-owned (CPO) — CPO vehicles come with manufacturer warranties at used car prices. You get new car reliability at 15-25% lower cost.
- Negotiate the car price, not the payment — Dealers manipulate monthly payments by extending loan terms. Always negotiate the out-the-door price first.
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Written by Finance Experts · Last updated September 2026
When Refinancing Makes Sense
- The rate drop is large enough to matter. A useful starting point is at least one percentage point below your current auto loan rate; smaller drops often get eaten by fees.
- You keep the car past the break-even point. Example: $20,000 remaining at 8% with 60 months left, refinanced to 6%, lowers the payment from about $406 to $387. A $400 refinance fee is recovered in roughly 21 months — sell or total the car before that and the refinance cost you money. You are not stretching the term to cut the payment: stretching 48 remaining months into 72 lowers the monthly bill but raises total interest, so check the total-paid figure before signing.
- Your credit profile improved. Auto rates are priced on credit, so a score jump of 40 or more points usually justifies a fresh quote even if you applied recently.
- There is no prepayment penalty. Read the current loan payoff terms first; a penalty can cancel an otherwise-cheap refinance.
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Frequently Asked Questions
What credit score do I need for an auto loan?
Most lenders prefer 660+ for good rates. Scores above 700 get the best rates (5-7%). Below 600, expect rates above 10-15%. Credit unions often offer more favorable terms than dealerships for borrowers with fair credit.
Should I get a new or used car loan?
Used car rates are typically 0.5-1.5% higher, but used cars cost 20-30% less. A 2-3 year old used car is the sweet spot — most depreciation has occurred, the car is still reliable, and you save thousands.
How long should my auto loan term be?
48-60 months is optimal. Longer terms (72-84 months) have higher rates and you pay thousands more in interest. A $30,000 loan at 6% costs $4,800 in interest over 60 months vs $7,200 over 72 months.
What is negative equity (being upside down)?
Negative equity means you owe more on the car than it is worth. This happens with long loan terms, small down payments, or rapid depreciation. Put at least 10-20% down to avoid this.
Should I finance through the dealer or get pre-approved?
Always get pre-approved before visiting the dealership. Credit unions and online lenders often beat dealer financing by 0.5-1.5%. A 1% rate difference on a $30,000 loan saves $900 over 5 years.
How much should I put down on a car?
Put at least 10-20% down to avoid negative equity and get better rates. 20% down eliminates the risk of being upside down. A larger down payment also means a smaller loan and less total interest.
Can I refinance my auto loan?
Yes, if your credit score has improved or rates have dropped. Refinancing a $25,000 balance from 8% to 5% saves about $750 over the remaining term. Check for prepayment penalties before refinancing.
What is the total cost of car ownership?
Beyond the monthly payment, budget for: insurance ($1,200-$3,600/yr), maintenance ($500-$1,500/yr), fuel ($1,200-$3,000/yr), registration ($200-$800/yr), and depreciation (biggest cost — $4,000-$8,000/yr for a new car).
How do I calculate my car payment?
Use the formula M = P · [r(1+r)^n] / [(1+r)^n - 1], where P is the loan amount (price plus tax and fees minus down payment and trade-in), r is the monthly interest rate, and n is the number of months. Enter those numbers in the calculator above to get the payment instantly.
How much is sales tax on a car in Texas?
Texas charges 6.25% state vehicle sales tax plus up to 2% local option tax, capped at 8.25% combined. It applies to the price after any trade-in credit and can usually be financed with the purchase.
How much car can I afford?
A common guideline is that total vehicle costs (payment, insurance, fuel, maintenance) should stay under 15-20% of take-home pay, with the loan payment itself around 10%. On a $5,500 monthly take-home that means roughly a $550 car payment - use the affordability section above to work backward to a price.
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