Page published October 27, 2026. Updated November 6, 2026
Get the free Car Buyer’s Cheat Sheet, 7 things to know before you sign anything. The numbers that matter, in plain English, on one page.
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Go ahead, play with it. Change any number and watch the total move.
Run your own discount
Enter the price, the discount, your rate and the loan length. The calculator shows the monthly payment with and without the discount, the interest saved, and the total saved over the loan, with the sales tax saving shown separately. Then it compares two ways to get a lower cost: take the discount at your market rate, or pay full price at a promotional rate. The sales tax line uses the site example rate of 7% unless you change it, and the discount is assumed to reduce the taxable price, which is how most states treat it.
APR is the yearly interest rate on the loan, in percent, the price of borrowing, before fees.
A promotional rate: the dealer’s low yearly rate, offered instead of a discount.
How to read it: the winner is whichever path costs less in total over the whole loan, not whichever cuts the monthly payment most.
Assumptions shown, not hidden: the amount financed is the price plus sales tax, minus the discount and the tax on the discount. No down payment, trade-in or fees are included, so the figures isolate what the discount itself is worth. Your quote will add those lines.
Where the numbers come from: Vehicle price: average new car $50,562, Kelley Blue Book, September 2026 · Interest rate: Experian, Q2 2026, average 6.35% new, 11.19% used.
Calculation transparency
Jurisdiction. United States. Sales tax is set by your state, so the tax saving on a discount depends on where you buy and register the car.
Rules and time period. The worked example uses a $35,000 car, a $1,000 discount, 6.35% APR over 60 months, and 7% sales tax. The calculator default rate is the Experian Q2 2026 average for a new car, and the default price benchmark is the Kelley Blue Book September 2026 average new-vehicle transaction price of $50,562.
Scope and limitations. Educational estimate only. The calculator isolates what the discount itself is worth: no down payment, trade-in or fees are included. Whether a promotional rate is available depends on the lender, the car and your credit, and a discount only saves the tax where it reduces the taxable price. No figure on this page is a quote, and nothing here claims any discount or rate is obtainable.
Source links checked November 6, 2026. Figures: Experian State of the Automotive Finance Market (Q2 2026); Kelley Blue Book average transaction prices (September 2026).
Primary sources: Experian, average car payment and loan rates; Kelley Blue Book, September 2026 average transaction prices; CFPB, auto-loan shopping guidance; Regulation Z, 12 CFR Part 1026. How the numbers are calculated is written down on the methodology page, and every source is listed on the sources page.
How to use
- Enter the vehicle price. The label shows the $50,562 average new-car price from Kelley Blue Book, September 2026, as a yardstick.
- Enter the discount in dollars. $1,000 is the default, the size of discount this page is named for.
- Enter your interest rate and the loan length. The label shows the Experian Q2 2026 averages, 6.35% on a new car and 11.19% on a used car. Replace the rate with a real offer when you have one.
- Check the sales tax rate. The 7% default is the site example rate. Your state rate moves the tax saving.
- Read the payment with and without the discount, then the comparison underneath. It shows whether the discount at your rate or the full price at the promotional rate costs less in total.
Formula
The amount financed without the discount is the vehicle price plus sales tax. With the discount, it is the price minus the discount, plus sales tax on the lower price. The tax saved is the discount times the tax rate.
The monthly payment equals the amount financed times the monthly rate times one plus the monthly rate raised to the number of months, all divided by one plus the monthly rate raised to the number of months, minus one. The monthly rate is the APR divided by 12. When the APR is zero, the payment is the amount financed divided by the number of months.
Total paid equals the monthly payment times the number of months. Interest equals total paid minus the amount financed. The total saved by the discount equals the total paid without it minus the total paid with it, which is the discount plus the tax saved plus the interest saved.
The comparison runs the same payment math twice: once on the discounted price at your market rate, once on the full price at the promotional rate. The path with the lower total paid costs less. A low rate can beat a discount, because interest is charged on the whole loan for the whole term, while a discount only cuts the amount borrowed once.
Definitions
Discount. A cut in the vehicle price, in dollars. On this page it also cuts the sales tax and the interest, because both are charged on the price.
Rebate. A discount paid by the manufacturer, usually offered as an alternative to a low promotional rate. The comparison on this page prices that choice.
Amount financed. The price plus sales tax, minus any discount. The loan is taken out on this figure, not on the sticker price.
APR. Annual percentage rate, the yearly cost of borrowing before fees. Experian Q2 2026 averages are 6.35% on a new car and 11.19% on a used car.
Monthly payment. The fixed amount paid each month. It covers interest first, then principal, and it is set by the amount financed, the APR and the loan length.
Interest saved. The interest on the loan without the discount minus the interest with it. It grows with the rate and the loan length.
Total saved. The discount plus the tax saved plus the interest saved. It is the whole value of the discount over the loan.
Promotional APR. A below-market rate offered by the manufacturer or lender, often instead of a rebate. The calculator compares it with the discount at your market rate.
The extra $70 is the sales tax you no longer pay on that $1,000, at the site example rate of 7%. The extra $232 on top of that, when financed, is the interest you no longer pay on $1,070 borrowed over 60 months at 8%. Your state tax rate and your actual loan rate will move both figures.
Worked example: $1,000 off, cash and financed
| How you pay | Price cut | Tax saved at 7% | Interest saved | Total saved |
|---|---|---|---|---|
| Cash | $1,000 | $70 | $0 | $1,070 |
| Financed, 60 months at 8% | $1,000 | $70 | $232 | $1,302 |
The financed interest figure is our own amortization arithmetic: borrowing $1,070 less over 60 months at 8% means $1,302 in total payments avoided, of which $1,070 is principal and $232 is interest. The same arithmetic scales: $5,000 off is worth $5,350 in cash and $6,509 when financed, since $5,350 less borrowed over 60 months at 8% avoids $1,159 in interest.
Worked example: a $35,000 car, $1,000 off, at the average new-car rate
A $35,000 car with $1,000 off, financed over 60 months at 6.35%, the Experian Q2 2026 average rate on a new car, with 7% sales tax. The calculator above runs the same math.
| Without the discount | With $1,000 off | Saved | |
|---|---|---|---|
| Amount financed | $37,450 | $36,380 | $1,070 |
| Monthly payment | $730 | $709 | $21 a month |
| Interest over 60 months | $6,357 | $6,176 | $182 |
| Total paid | $43,807 | $42,556 | $1,252 |
The $1,252 total is $1,000 off the price, plus $70 of sales tax saved, plus $182 of interest saved. The payment falls by $21 a month, not $100. The $100 figure only works on a loan of about 11 months, not a normal car loan term. At the used-car average rate of 11.19%, the same $1,000 off saves $23 a month, still far from $100.
Discount or low rate? The same $35,000 car at a 0.9% promotional rate, with no discount, costs $38,313 in total, with a $639 monthly payment. That is $4,243 less in total than the $1,000 discount at 6.35%, and $71 less a month. The verdict on these numbers: the low rate beats the $1,000 discount by a wide margin, because the rate applies to the whole loan for five years while the discount only cuts the amount borrowed once. A promotional rate as high as about 5.14% still beats $1,000 off at 6.35%, and it would take a discount of about $4,400 at 6.35% to match a 0.9% rate on the full price. Your own rate and discount change the answer, which is what the calculator above is for.
How to use this in a negotiation without fooling yourself
Price the whole deal, not the discount alone. A $1,000 discount that arrives with $1,000 of added fees is worth nothing, and a discount on a car priced above every comparable quote can still leave you overpaying. Compare out the door totals between dealers, using the out the door price calculator, and check every line against what dealer fees are real before counting any saving. A discount is only worth the table above when it survives the fee lines intact.
Two cautions. First, the tax saving assumes the discount reduces the taxable price, which is how most states treat it, but your state rules and any trade in change the taxable figure, so check your quote. Second, this page says nothing about whether any dealer will offer $1,000 off any particular car. It prices the discount so you can judge an offer you already have, not so you can count on one you do not.
Figures: site example sales tax 7%, site standard loan 8% APR over 60 months. Interest figures are Driveonomics amortization arithmetic on the reduced amount financed.
Educational estimates only, not financial, tax, legal or insurance advice. Every figure on this page is a typical example worked from the inputs stated on the page, not a quote for a specific car, loan, or driver. Your rate, insurance, fuel use, and resale value will move your total. See Terms.
Questions people actually ask
What is $1,000 off a car really worth?
In cash, $1,070, because the $1,000 price cut also saves $70 of sales tax at the site example rate of 7%. When financed over 60 months at 8%, it is worth $1,302, because the $1,070 smaller loan also avoids $232 in interest. Your state tax rate and your actual loan rate will move both figures.
What is $5,000 off really worth?
In cash, $5,350, from the $5,000 price cut plus $350 of sales tax saved at 7%. When financed over 60 months at 8%, it is worth $6,509, because $5,350 less borrowed avoids $1,159 in interest. The saving scales with the discount, as long as the discount survives the fee lines intact.
Does a discount always save the sales tax too?
Usually, where the discount reduces the taxable price, which is how most states treat it, but your state rules and any trade in change the taxable figure. Check the tax line on your written quote rather than assuming it, and compare out the door totals between dealers.
Does this page say I can get $1,000 off?
No. This page prices a discount without claiming one is obtainable. It is useful for judging an offer you already have, or for comparing two offers, not for counting on a discount no dealer has offered.
Is $1,000 off the same as $100 off my monthly payment?
No. On a $35,000 car financed over 60 months at 6.35%, $1,000 off cuts the payment by about $21 a month, from $730 to $709, because the discount also saves $70 of sales tax at 7% and $182 of interest. The $100 figure only works on a loan of about 11 months, not a normal car loan term.
Related: The best discounts come at the right time. See when the cheapest time to buy a car is.
Related: A discount lowers the amount you borrow. See how much your car payment will be.
Related: A discount works like a bigger down payment. See how much to put down.
Related: A rebate is a choice, not a straight discount. See whether the cash back or the low APR saves more.