Finding Your Monthly Payments with an Auto Loan Calculator
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by: laurawilder
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Working out how much your monthly car payment will be is more complicated than dividing the amount of the loan by the number of months in the loan term. Interest, fees, and taxes add a hefty chunk to the total amount. When budgeting to buy a car, use an auto loan calculator to do the initial math so you can go car shopping with an accurate idea of how much you can pay for a car.
Auto loan calculators typically require information like the amount of the loan, the term of the loan in years or months, and the interest rate. Some calculators will also take into account where you live, whether you plan to make any extra payments on the loan, whether you made a down payment or had cash taken off because of your old cars trade in value, how much sales tax you will be expected to pay, and even whether you must pay any fees on top of the loan. Many auto loan calculators can help you to compare getting an auto loan to leasing the same car.
Inputting accurate answers is essential to using an auto loan calculator. Minor mistakes can add up to large variations in the amount of your monthly auto payment. When you do not know the exact answer, estimate conservatively. For instance, if you do not know exactly how much interest you are likely to pay, estimate your interest a little high. If you do not know exactly how large a down payment you will be able to put down, estimate the amount a little low.
Play around with the numbers, using a longer or a shorter term, a higher or a lower down payment, and so on. Get a sense of how changes in the different factors change the monthly loan payment. Understanding how the different parts of an auto loan work together will be a great help when you negotiate with the dealership or the bank for funding.
Also remember that lower is not always better. For instance, if you take out a loan for $15,000 with 10 percent interest and a three year term, you will pay $484 a month, and the total cost of the loan will be $17,424. Extending the same loan to five years will reduce your monthly payments to just $319, but you will pay $19,140 in total. Be sure to find an auto loan calculator that tells you the total amount you will pay as well as your monthly payment.
Buying a car is a big step. Start the process with the most accurate information you can get, and use an auto loan calculator to check your math and work out how much of a loan you can afford. It will make the process of buying a car far more pleasant. Good luck, and happy shopping!
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