Car Loan Calculator
Includes provincial sales tax and trade-in.
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Questions
Does a trade-in reduce the sales tax I pay?
In most Canadian provinces, yes — you pay tax on the price after the trade-in is deducted. Trading a $15,000 car against a $40,000 purchase in Ontario saves 13% of $15,000, about $1,950, compared with selling privately and paying tax on the full price. That credit is the honest counterweight to the advice that private sales fetch more.
Is a private sale still better than trading in?
Often less than it looks. If a dealer offers $15,000 on trade and a private buyer offers $17,000, the after-tax difference in Ontario is only around $50 once the trade-in tax credit is counted. Work out the tax saving before deciding the hassle of a private sale is worth it.
How bad is an eight-year car loan?
On $35,000 at 7.5%, stretching from four years to eight cuts the payment by 43% and more than doubles the total interest, from about $5,600 to about $11,700. It also guarantees a long stretch of negative equity, because cars depreciate fastest in the first three years while the loan balance falls slowest. If the payment only works at eight years, the car is usually too expensive.
What costs are missing from the vehicle price?
Freight and pre-delivery inspection, typically $1,800–2,500 on a new vehicle and taxable. Licensing and registration, usually $60–200. Dealer administration fees, which are negotiable. And the finance-desk add-ons — extended warranties, rustproofing, gap insurance — which are high-margin, financeable, and therefore easy to hide inside the monthly payment.
Should I take 0% financing or the cash rebate?
Work out both, because the rebate wins more often than people expect. A $3,000 rebate on a $35,000 car financed at 7% usually costs less overall than the full price at 0%. Manufacturers offer one or the other precisely because the choice is not obvious.
About car loan calculator
The trade-in tax credit is real money
In most Canadian provinces you pay sales tax on the price after the trade-in is deducted, not before. Trading in a $15,000 car against a $40,000 purchase in Ontario saves 13% of $15,000 — about $1,950 — compared with selling privately and paying tax on the full price.
That credit is the honest counterweight to the usual advice that private sales fetch more. If a dealer offers $15,000 on trade and a private buyer offers $17,000, the after-tax difference in Ontario is only about $50. Work out the tax saving before deciding it is worth the hassle of a private sale.
Long terms are how a payment gets made affordable
| Term | Payment on $35,000 at 7.5% | Total interest |
|---|---|---|
| 4 years | $846 | $5,626 |
| 6 years | $605 | $8,571 |
| 8 years | $486 | $11,682 |
Stretching from four years to eight cuts the payment by 43% and more than doubles the interest. It also guarantees a long stretch of negative equity — owing more than the car is worth — because cars depreciate fastest in the first three years while the loan balance falls slowest. If the payment only works at eight years, the honest conclusion is usually that the car is too expensive.
What is missing from the sticker price
- Freight and PDI — typically $1,800–2,500 on a new vehicle, and taxable.
- Licensing and registration — provincial, usually $60–200.
- Administration and documentation fees — dealer-set and negotiable.
- Extended warranties, rustproofing, gap insurance — high-margin add-ons usually presented at the finance desk, and financeable, which hides their cost inside the payment.
0% financing versus a cash rebate
Manufacturers often offer one or the other, not both. A 0% loan sounds unbeatable, but a $3,000 rebate on a $35,000 car taken with a 7% loan usually costs less overall. Work out both: finance the rebated price at the market rate, and compare the total against the full price at 0%. The rebate wins more often than people expect.
Related
Compare general borrowing with the loan calculator, check the sales tax in your province with the sales tax calculator, or browse the other financial calculators.