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Ways to lower your car payment
- Get pre-approved by a bank or credit union before visiting the dealer, so you can compare the dealer's rate.
- Negotiate the price before talking about the monthly payment.
- Put more down or pay off negative equity first rather than rolling it in.
- Choose the shortest term you can afford — the interest difference is large.
Assumptions
- Taxes and fees are financed. Some states tax the full price regardless of trade-in; set that option to match your state.
Frequently asked questions
How is sales tax handled on a car with a trade-in?+
Most states charge sales tax only on the price minus your trade-in value, which can save hundreds of dollars. A few (including California, Hawaii, Kentucky, Maryland, Michigan, Montana and Virginia) tax the full price — turn off the trade-in tax credit option for those.
What is negative equity?+
When you owe more on your current car than it's worth. The difference is usually added to the new loan, which raises your payment and the interest you pay.
Is car loan interest tax-deductible?+
Starting in 2025 and through 2028, interest on a loan for a new, US-assembled personal vehicle can be deducted up to $10,000 a year, phasing out above $100,000 of income ($200,000 joint). The calculator shows your first-year interest.
How long should a car loan be?+
60 months or less is a common guideline. 72- and 84-month loans lower the payment but cost much more interest and often leave you owing more than the car is worth.
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Last reviewed October 15, 2026. Calculator version 1.0.0. Results are estimates for educational purposes, not financial, tax or lending advice. How we check our numbers.