How is a monthly car payment calculated?

A car payment is based on three things: the amount financed, the interest rate and the number of months. The amount financed is the vehicle price plus taxes, fees and any add-ons, minus your down payment, rebates and trade-in equity. Lenders use a standard amortization formula, so early payments go mostly toward interest and later ones mostly toward principal. On OffLot, the 'What can I afford?' tool on each vehicle page works backward from a monthly budget.