1. What is the Auto Loan Calculator?

The Auto Loan Calculator With Negative Equity And Sales Tax helps estimate monthly payments when trading in a vehicle with negative equity (owing more than the trade-in value) and including sales tax in the financing.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

• \( LoanAmount \) — Vehicle price + tax + negative equity + fees - down payment
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Loan term in months

Explanation: The formula calculates the fixed payment needed to fully amortize the loan over the specified term.

3. Understanding Negative Equity

Details: Negative equity occurs when you owe more on your trade-in than its current value. This amount gets added to your new loan, increasing both the principal and total interest paid.

4. Using the Calculator

Tips: Enter all required fields accurately. For sales tax, use your local rate. Include all fees (documentation, registration, etc.) that will be financed.

5. Frequently Asked Questions (FAQ)

Q1: Should I roll negative equity into a new loan?
A: It's generally not advised as it increases your debt. Consider paying it down first or choosing a less expensive vehicle.

Q2: How does sales tax affect my loan?
A: Sales tax is typically included in the financed amount, increasing both your monthly payment and total interest.

Q3: What's a good interest rate for an auto loan?
A: Rates vary by credit. As of 2023, excellent credit (720+) might get 4-6%, while subprime could be 10-20%.

Q4: How does loan term affect my payment?
A: Longer terms reduce monthly payments but increase total interest paid. 60-72 months is common, but shorter is better if affordable.

Q5: Are there prepayment penalties?
A: Most auto loans don't have prepayment penalties, but check your contract. Paying extra reduces total interest.