Decide How Much You Can Afford to Spend with an Auto Loan Calculator
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. This method doesnt take into account the considerable sum added by the interest, taxes, and other fees. When you work out your budget for
buying a car, do the initial math with an auto loan calculator so you know exactly how much you can really afford to pay for a car before you start car
Auto loan calculators usually ask for data like the amount of the loan, the length of the loan, and the interest rate you plan to pay. A few calculators will
also consider where you live, whether you plan to pay any extra on the loan to informally reduce the length of the loan, whether your old cars trade in
value or a down payment will reduce the amount of the loan, and whether sales tax or fees will add to the amount of the loan. Some auto loan
calculators have a "loan vs. lease" option that will compare the cost of an auto lease to the cost of a loan on the same car.
When using an auto loan calculator, its important to use accurate information. Tiny variations can add up to big differences in your monthly 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 feel for how small variations
affect the bottom line. 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. A $15,000 loan with 10 percent interest, paid off over three years, will cost you $484 per month, for a
total of $