Calculate monthly payments, total interest, and true ownership costs including insurance and gas.
Two numbers matter here and only one of them is the monthly payment. Enter the deal as the contract states it, then read both.
Price $28,000, sales tax at 6% is $1,680, so $29,680. Take off a $3,000 down payment and the loan is $26,680.
| Term | Payment | Total interest |
|---|---|---|
| 60 months | $527.04 | $4,942 |
| 72 months | $453.59 | $5,978 |
Twelve extra months saves a month's payment, about $73, and costs about $1,036 more in interest. It also keeps you owing more than the car is worth for longer, which matters the day it is totaled without gap coverage.
Then add ownership. A $527 payment with $150 of insurance and $160 of fuel is already $837 a month before maintenance, registration, or tires. The loan is the smallest part of some car budgets and the only part people quote to each other.
The payment is principal and interest only. Everything in the true-cost row is what the car actually takes out of your month, and it does not stop when the loan does: insurance, fuel, maintenance, and registration continue at roughly the same rate.
The 20/4/10 guideline — 20% down, no more than four years, total car costs under 10% of gross income — is a ceiling, not a target. On $60,000 of gross income, 10% is $500 a month, and the example above already exceeds it with the loan payment alone. That is the checklist doing its job.
A longer term is not automatically wrong. It is the right tool when the alternative is a worse rate or no car at all. It is the wrong tool when it exists only to fit a payment into a budget that cannot also cover insurance and fuel.
This calculator will finance whatever tax rate you type. A rate set too low produces a payment that will not survive the finance office, so check the county rate rather than a remembered one.
The APR from a lender quote, because it includes fees and is the number that reflects the true cost. Dealer quotes sometimes advertise a rate that assumes perfect credit; the APR on your actual contract is the one that matters.
It costs more in total and keeps you upside down longer. If the shorter payment does not fit, a cheaper car usually fixes the budget better than a longer loan does.
In many states the taxable amount is reduced by the trade-in value, so the tax saving is real money. This page taxes the full price, which overstates the loan slightly; use the out-the-door calculator for the accurate figure.
It covers the difference between what insurance pays and what you still owe if the car is totaled. It matters most when the down payment is small and the term is long, which is exactly when it is usually offered.
No. The loan payment is separate. The true-cost row adds your insurance, fuel, maintenance, and registration estimates so you can see the whole monthly figure.
Interest is charged on the balance, which is highest at the start. On a 60-month loan the split shifts steadily toward principal, so extra payments early save more than the same amount later.
The payment uses the standard auto-loan amortization formula. How to shop the contract is a separate skill, and the CFPB covers it.
Last updated: November 2, 2026. Reviewed by David Liu. Sales tax rules vary by state; this page taxes the full vehicle price.