Plug in your numbers
Purchase price. This is also called the selling price or total purchase price. It’s the price you agree to buy the car for, including any upgrades or trims you selected. It is not the same thing as a new car’s MSRP (manufacturer’s suggested retail price). MSRP doesn’t include fees or upgrades that can increase the price quickly. We have tips on how to negotiate on car price.
Sales tax percentage. This is how much your state charges you in taxes when you buy certain items. Different states have different tax rates for different things and some states have no sales tax. A simple internet search can tell you your area’s sales tax rate on cars.
Title and registration. These are fees required by the government to keep track of who owns the vehicle and where. How much they are depends on where you live and what vehicle you’re getting. But, again, an easy internet search where you type the name of the county and state you live in with the vehicle you want and the words “title and registration” should return an answer.
Down payment. This is how much money you pay upfront for the car before you sign any loan paperwork. It reduces how much you borrow and lowers your monthly loan payment.
Net trade-in value. Your trade-in is the car you’re selling to the dealership in the deal for your new car. The trade-in value is how much that first car is worth. The net trade-in value is the difference in how much the car is worth and how much you owe on it.
First, find out what your trade-in is worth by looking it up for free online in an industry guide such as KBB or NADAguides. Next, call your current lender (the company to whom you make monthly payments) and ask for the “payoff,” the amount you would have to pay that day if you were to pay off the entire loan.
If the car is worth more than you owe on it, you can use that as a down payment on your new car.
If the car is worth less than what you owe on it, you’ll either have to pay that amount or add that amount to the total you’re borrowing in the new loan.
Finally, to find the “net” value, subtract the car’s payoff from its value (don’t do it the other way around).
Example 1: Jane’s trade-in is worth $3,000 and she owes $2,000 on it. Her net trade-in value is $1,000, a positive number.
Example 2: John’s trade-in is worth $4,000 and he owes $5,000 on it. His net trade-in value is -$1,000, a negative number. Positive or negative, you put that number into the box.
You should not sell the car to dealers for anything less than what KBB or NADAguides says it is worth as a trade-in. Just remember to take the car’s condition into account when you value it. The default condition on KBB is “good.” NADAguides gives a range from “rough” to “clean.” If your car was totaled or suffered a major accident, it may be worthless.
Your credit score is a three-digit number between 850 and 300 that you earn based on how well you pay bills on time, how much debt you have and other factors. The better your credit score, the more likely you are to be approved for new loans, with better interest rates and terms.
You may not have a credit score — or you may not have a strong one — if you’ve never taken out a loan.
You may have a low credit score if you’ve often missed payments or paid bills late.
You may have a high credit score if you’ve paid significant loans and bills on time.
To check your score, go here. To see more on how to get an auto loan with bad credit, go here.
This number is a percentage. It’s what the lender charges for loaning you the money. The actual amount you pay the lender is based on this percentage and how much you borrow. You can see what interest rate you may be preapproved for on LendingTree.
This is how many years the loan lasts from the time you sign for it until the final monthly payment.
Estimated auto payment
This section shows:
Estimated auto payment. This is your estimated monthly payment based on what you typed in the fields we described above.
Total loan amount. This is how much money you would borrow in total, including any amount you need to cover taxes, title, license and negative equity. It is probably higher than the purchase price of the car because it includes these things.
Total payments. Assuming you make one payment a month, this is how many payments you would make for the entire time you have the loan.
Is the payment too high? Or, maybe you can afford to pay more. If you don’t like this payment, plug in new numbers by shortening or lengthening the loan term, increasing or decreasing your down payment or starting over with a different car price of another vehicle. This way, you can compare vehicles to see how the payment changes.
Total loan cost breakdown
What the estimated payment doesn’t show you is what you’ll pay in interest — total loan cost breakdown does. This part tells you how much in total you would pay for the car deal: the car, the loan, and the sales taxes and fees. It shows how much of your money goes where.