How to Calculate the Car Payment with a Trade-In Vehicle

When you are purchasing a new car, you can greatly reduce the amount of your monthly payments by trading in another car. The amount you get for your trade-in vehicle depends on the value of that car. You can calculate the amount of your monthly car payments with a trade-in vehicle by making a few decisions about your loan length and what type of car you are purchasing.

Instructions

1

Determine the amount your new car costs, including taxes and fees, the amount you are granted for your trade-in vehicle, the interest rate of your loan per month and the number of monthly payments you want to make. Your dealership or bank can tell you the cost of your new car and your interest rate per month. You can determine your monthly interest rate by taking your annual interest rate and dividing that number by 12 months. Typical car loans last from 36 to 60 months, but there are exceptions.

2

Subtract the amount you will receive for the trade-in vehicle from the amount you owe for the new car, including taxes and fees. This is the total amount of the principal of your car loan.

3

Calculate your monthly car payment with a trade-in vehicle using the Amortization Calculation Formula (see Resources). You should use the formula under the "Calculating the Payment Amount Per Period" section of this web page, where the principal P is the total amount from Step 2, interest rate R is the total interest rate per period from Step 1 and the number of car payments is indicated by N. Multiply the interest rate per period R by "1 plus R to the Nth degree." Divide that figure by "1 plus R to the Nth degree" minus 1. Multiply the total by the total amount of the principal P.

The result is your monthly car payment with a trade-in vehicle.