Everyday money · guide
Car Loan Calculator: how it works in 2026, with a worked example
Enter the price, your province, your down payment and trade-in, and the rate and term the dealer offers. Get the payment at any frequency, the sales tax on the deal, total interest for each term, and whether a promo rate beats a cash rebate.
How this calculator works
The amount financed is the price minus your trade-in, plus sales tax on that reduced price, minus your cash down payment, plus any balance still owed on the trade-in and any fees rolled in. The payment is the level amount that repays that balance with interest over the term, using the same formula banks use.
Worked example
A $35,000 car in Ontario with a $5,000 trade-in, $3,000 down, at 6.99% over 72 months.
| Step | Amount |
|---|---|
| Price after trade-in | $30,000 |
| HST at 13% | $3,900.00 |
| Less cash down | −$3,000 |
| Amount financed | $30,900.00 |
| Monthly payment | $526.67 |
| Total interest over 72 months | $7,019.90 |
Over 48 months the payment would be $739.80 and the interest $4,610.40.
Assumptions
- Sales tax is your province’s combined rate applied to the price after trade-in. Quebec applies QST on the price before GST, as the tax rules require. In British Columbia the PST on a dealer-sold vehicle is tiered by purchase price (7% under $55,000 up to 20% at $150,000 and over, per Bulletin PST 308); the tier is set by the price before the trade-in, and the calculator uses the tiers from its 2026 data file.
- Interest is calculated on the declining balance with payments at the end of each period.
- Fees, extended warranties and insurance products added by the dealer are financed and taxed unless you enter them separately.
Questions people ask
- How much is sales tax on a car in British Columbia?
- 5% GST plus a PST that rises with the price of the vehicle when you buy from a dealer: 7% under $55,000, 8% from $55,000, 9% from $56,000, 10% from $57,000, 15% from $125,000 and 20% from $150,000 (BC Bulletin PST 308). A $60,000 car is taxed at 15% in total, $9,000; a $130,000 car at 20%, $26,000. The rate tier is set by the price before a trade-in is deducted, and the calculator applies these tiers automatically.
- Is sales tax charged on the full price of a car?
- On the price after your trade-in in most provinces, so a trade-in saves you the tax on its value as well as reducing the loan. Cash down payments do not reduce the taxable price. Private sales in Ontario, BC, Quebec and the Prairies are taxed too, at the provincial part when you register the car.
- Should I take the 0% financing or the cash rebate?
- It depends on the rebate size, the regular rate you would pay instead, and the term. A $3,000 rebate financed at 6.99% over 60 months does not beat 0% on a $35,000 car: $32,000 at 6.99% costs about $38,009 in total, $3,009 more than $35,000 at 0%. A rebate wins only when it is large relative to the price or the term is short. A $1,000 rebate almost never does. Enter both in the calculator and it shows the total cost of each.
- What term should I choose?
- The shortest payment you can comfortably afford. An 84-month loan lowers the payment but you pay interest for seven years and are likely to owe more than the car is worth for the first half of it. The calculator lists total interest for 48, 60, 72 and 84 months side by side.
- Are bi-weekly payments cheaper?
- Only if they are accelerated. Regular bi-weekly payments are just the monthly amount split into 26 payments; accelerated bi-weekly is half the monthly amount 26 times, which adds one extra monthly payment a year and shortens the loan.
- What is a good car loan rate in 2026?
- Manufacturer-subsidized rates on new cars run from 0% to about 5%; bank and credit union rates for new cars are typically 6% to 8%, and used-car rates higher. Rates above 10% usually mean a dealer is marking up a lender's rate; ask your own bank first.
- Can I pay a car loan off early?
- Most Canadian car loans are open and can be prepaid without penalty, but check the contract. Some dealer financing charges a fee or is a lease disguised as a loan.
Sources
Every figure on this page comes from one of these primary sources. Data last verified .