Auto Loan Calculator

About Auto Loans

Most people turn to auto loans during a vehicle purchase. They work as any generic, secured loan from a financial institution does with a typical term of 36, 60, 72, or 84 months in the U.S. Each month, repayment of principal and interest must be made from borrowers to auto loan lenders. Money borrowed from a lender that isn't paid back can result in the car being legally repossessed.

Dealership Financing vs. Direct Lending

Direct Lending: A loan from a bank, credit union, or financial institution. Provides more leverage to negotiate with dealers.

Dealership Financing: Loan initiated and completed through the dealership, often with captive lenders associated with car makes.

Common Fees

• Sales Tax: Most states collect sales tax (5 states have no sales tax: AK, DE, MT, NH, OR)
• Document Fees: Dealer fee for processing title and registration
• Title and Registration Fees: State fees for vehicle registration
• Destination Fee: Vehicle shipping cost ($900-$1,500)
• Insurance: Full coverage mandatory for financed vehicles

Auto Loan Strategies

• Preparation: Know your budget and research rates before visiting dealerships
• Credit: Better credit scores result in lower interest rates
• Cash Back vs. Low Interest: Compare which option saves more money
• Early Payoff: Check for prepayment penalties before signing

Trade-in Value

In most states, sales tax is calculated on the difference between the new car price and trade-in value. However, some states (CA, DC, HI, KY, MD, MI, MT, VA) do not offer sales tax reduction for trade-ins. Selling your car privately typically yields more value than trading in at a dealership.

Buying with Cash vs. Financing

Paying with cash avoids monthly payments, interest charges, and the risk of being underwater on the loan. However, if a very low interest rate is offered, it might be better to invest the cash elsewhere for higher returns.