Figure out what a car will actually cost you per month before you talk to a dealer. Factor in trade-in value, down payment, sales tax, and your real interest rate.
Monthly payment is calculated using the loan amortization formula: M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the loan principal after down payment/trade-in, r is your monthly interest rate, and n is the loan term in months.
Rates vary by credit score and loan term, typically ranging from around 5% for excellent credit to 15%+ for subprime borrowers. Use your actual pre-approval rate for the most accurate estimate.