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Mathematical Formula
Financed = VehiclePrice + Tax − DownPayment − TradeIn
- Taxable Price = Vehicle Price minus Trade-In Credit (in tax-credit states)
- Sales Tax = Taxable Price × State/Local Sales Tax Rate
- Amount Financed = Net loan principal subject to interest charges
Auto financing costs depend not only on the vehicle sticker price and interest rate, but also on trade-in credits and state sales taxes. In most jurisdictions, trading in your existing car reduces the taxable purchase price, lowering both upfront sales tax and total loan principal.
Providing a larger down payment reduces the amount financed, directly decreasing the total interest paid over the life of your car loan.
Mathematical model verified & deterministicOpen Car Finance Calculator