How this auto loan payment is built

A fixed monthly schedule

The auto loan page uses a fixed-rate monthly amortization. Interest for a month is the unpaid balance times the APR divided by 12, rounded to the cent. The contractual payment is also rounded to the cent. The last payment pays whatever principal remains so the balance does not go negative.

That convention is a planning model. A lender may accrue interest by the day, collect odd-day interest, or round differently. The result is not a payoff quote and it does not look up a current auto loan rate.

Trade equity is counted once

Trade equity is the allowance minus the payoff still owed on the vehicle you trade. Positive equity reduces the amount financed. It is not also added as cash down. Negative equity can be rolled into the new loan or paid in cash. The page states which choice the scenario uses.

Sales tax is illustrative. Full-price mode taxes the vehicle price. Trade-credit mode subtracts the allowance before tax. A rebate can come off before tax or after tax. Title and registration stay outside the tax. No state is selected and no local rate is fetched.

A longer term is not automatically cheaper

A 72-month term can lower the monthly payment and raise total interest compared with 60 months on the same price, tax, trade, and APR. Overall acquisition cost is the cash paid at signing plus the principal and interest payments. It is not the same number as total interest, and it does not add the trade-in allowance a second time.

Extra principal is applied to the remaining balance and the schedule stops at zero. Interest saved is the difference from the same loan without that extra principal.

Needs review before launch. Sales tax rules differ by state. The illustrative modes on this page are not a determination of tax due.

Try it in a calculator

Related guides

• 60-month versus 72-month auto financing
• Understanding positive and negative trade-in equity
• How down payments affect auto financing

Read the methodology

Written to explain how this site’s calculators work. Not a review by a licensed mortgage professional, and not a recommendation to borrow. These notes are not financial, tax, or legal advice.