Guide - Everyday Finance - US
US Auto Loans: Payment, APR, Taxes, Fees, and Trade-Ins
A car payment is only one part of the deal. The real loan depends on the out-the-door price, trade-in equity, APR, term, and whether fees are financed.
Start with the out-the-door price
The out-the-door price is the total price after sales tax, title and registration, dealer documentation fees, and any other financed charges. A rebate lowers the price, while positive trade-in equity and a down payment reduce the amount you borrow.
| Line | Amount |
|---|---|
| Vehicle price | $35,000 |
| Sales tax and fees | $2,975 |
| Cash rebate | -$1,000 |
| Down payment and trade-in equity | -$7,500 |
| Amount financed | $29,475 |
APR and term change the true cost
Stretching a loan from 48 months to 72 months can make the payment feel easier, but it usually increases total interest and slows equity buildup. That matters if you sell or trade the car before the loan is paid off.
Frequently asked questions
What is amount financed?
Amount financed is the loan principal after the vehicle price, taxes, fees, rebates, down payment, and trade-in equity are combined.
Is a lower monthly payment always better?
No. A lower payment from a longer term can increase total interest and leave you owing more than the vehicle is worth for longer.
What is negative equity?
Negative equity means you owe more on your trade-in than it is worth. If rolled into the new loan, it increases the new amount financed.