Used car loan calculator
The brand-new car loses ~20% of its value the moment it leaves the lot, and another ~20-30% over the next two years. If you buy a 2-3 year old vehicle someone else has already eaten that. Higher APR is the price you pay for skipping the worst depreciation — and the math usually still favors used.
Last updated 2026-05-13
The vehicle
Sales tax
Financing
- Sticker price
- $22,000
- Sales tax (6.5%, net)
- +$1,430
- Fees
- +$350
- Down payment
- −$2,500
- Amount financed
- $21,280
- Total interest
- $6,163
- Total paid (loan)
- $27,443
- Total out of pocket
- $29,943
MethodologyWhat's different about a used-car loan
What's different about a used-car loan
Higher APRs are structural, not optional. Used-auto rates typically run 3-4 percentage points above new-car rates. The reason is collateral risk — lenders prefer the predictable depreciation curve of a new car to the wider valuation range of a used one. As of 2026, typical used-auto APRs run 9-12% for prime credit, 12-18% for sub-prime. A 7.5% used-car loan offer is unusually good.
Loan terms are shorter.Most lenders cap used-car loans at 60 or 72 months — they don't want a 7-year-old car as collateral against a still-active loan. The 84-month-trap that plagues new-car financing is almost absent here.
The depreciation-already-taken argument: a new $35,000 car loses ~$7,000 in year 1 and another ~$5,000 in year 2. A 2-year-old version of the same car costs ~$23,000 and depreciates closer to ~$2,500/year going forward (steepest curve is past). Over 5 years of ownership the used buyer comes out roughly $8,000-$12,000 ahead on pure depreciation, even after paying the higher APR.
The sticker-vs-market gap is wider used.KBB lists three different prices for any used car: trade-in (what a dealer pays you), private-party (what an individual will pay), and dealer retail (what a dealer asks). The spread can be 20-25%. Always compare your offer against private-party and trade-in to know how much markup you're paying for dealer convenience.
CPO premium:manufacturer-certified pre-owned vehicles typically command $1,500-$3,500 premiums over uncertified equivalents. You're paying for extended factory warranty + multi-point inspection. Whether worth it depends on your risk tolerance and how long you'll keep the car. A $2,500 CPO premium pays back if the warranty avoids one transmission repair.
Sales tax treatment: same 49-states-net-of-trade-in / 4-states-tax-full-sticker split as new (CA/HI/KY/MI). Some states have used-car flat fees or caps in addition; check your DMV. Private-party purchases avoid dealer fees but you handle DMV paperwork yourself.
Vehicle history matters more than ever.Carfax / AutoCheck reports surface accident history, title issues, and odometer rollback. A clean Carfax doesn't guarantee the car's fine (only what was reported), but a flagged Carfax should usually kill the deal at the offered price.
When new makes more sense: if you plan to keep the car 10+ years, the depreciation argument fades — both new and used end up worth similar small amounts at end-of-life. Plus you get full warranty, latest safety features, and zero history-uncertainty. The used premium pays for predictability, not just cash.