1. What is the Auto Loan Payment Formula?

The auto loan payment formula calculates the fixed monthly payment required to repay a car loan over a specified term, including Texas state taxes and any down payment. This is the standard amortization formula used by most lenders.

2. How Does the Calculator Work?

The calculator uses the auto loan payment formula:

Where:

• \( PMT \) — Monthly payment amount
• \( P \) — Principal loan amount
• \( tax \) — Texas state tax amount
• \( D \) — Down payment amount
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Number of monthly payments

Explanation: The formula accounts for the time value of money, calculating equal monthly payments that pay off the loan plus interest over the term.

3. Texas Auto Loan Specifics

Details: Texas has a 6.25% state sales tax on vehicles, plus local taxes that can bring the total to 8.25%. This calculator helps account for these taxes in your monthly payment calculation.

4. Using the Calculator

Tips: Enter the vehicle price as principal, add Texas sales tax, subtract any down payment. Use the annual interest rate (as decimal) and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is Texas' auto sales tax rate?
A: Texas has a 6.25% state sales tax on vehicles, plus local taxes up to 2% (max 8.25% total).

Q2: Should I include registration fees in the tax amount?
A: No, this calculator is for sales tax only. Registration fees are separate in Texas.

Q3: How does the interest rate work?
A: Enter the annual rate as a decimal (e.g., 5% as 0.05). The calculator converts it to monthly rate.

Q4: What's a typical loan term in Texas?
A: Common terms are 36, 48, 60, or 72 months. Longer terms mean lower payments but more interest paid.

Q5: Does this include Texas' "10-day rule" for taxes?
A: No, this calculates standard payments. Texas gives 10 working days to pay sales tax after purchase.