Using a monthly car payment calculator is a great way to determine how purchasing a vehicle will impact your budget. This auto buying calculator makes car financing easy and affordable. Find out what you need to put down, the term, etc. to get the payment to fit your budget.
A car in an important investment, but unfortunately, it is one that will likely depreciate rather than increase in value. Therefore, it is wise to shop around so you can make a wise decision and make sure that you are getting the best deal possible. Car loans are so readily available today, but terms and conditions can vary widely. Things like interest rates and finance charges can make a big difference in your total cost.
With the average monthly car payment being $479, transportation costs can consume a large percentage of your income, so it is helpful to know your options and be prepared before visiting a dealership.
Today, you can shop for cars, find lending rates, and even apply for loans all online, so a monthly car payment calculator,although not 100% accurate, is a useful financial tool.
Benefits of a Monthly Car Payment Calculator:
1. Time Saving Tool. Since you can find almost all necessary information online, including car prices and interest rates, you can gain a realistic view of your options without having to make several appointments or fill out piles of paperwork from various lending institutions. You will know what to expect beforehand and will only have to visit the banks that have the best deal for your situation.
2. Compare Options. This car financing calculator allows you to compare the different aspects of the loan including duration, interest rates, various down payment amounts, and trade-in values to see how they will affect your monthly and total payments. You can try different options to see which ones most suit your budget and lifestyle so you can decide which loan is best for you.
3. Payment Amounts. By simply entering a few figures, you can learn the monthly payments for a particular vehicle and determine if your budget can afford the extra financial obligation.
4. Total Output Cost. This car buying calculator will take the financed amount, interest rate, and duration period to compute the total loan amount. You may be surprised at how much you can save by making a greater down payment or shortening the loan length.
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Points to consider:
1. New or Used. The cost of depreciation must be considered. Since used cars will depreciate less quickly than new vehicles, you may be able to finance a larger percentage of a used car without losing as much of your equity in the resale value. On the other hand, a new vehicle will have a higher future trade-in value. By entering the figures into the Monthly Car Payment Calculator, you can determine which kind of car would be better for you – new or used.
2. Amortization. The length of the loan can impact both the monthly payment and total cost to you. Many people are now opting for 6 year loans, which allows for smaller payments, but often results in you owing more on your car than it is worth when it comes time to trade it in. In fact, in 2010, 21.8% of Americans who bought new cars still had an average of $3,798 in negative equity on their trade-in vehicle (Edmunds.com). This means that more than 1/5 of the cars financed included debt carried over from a previous vehicle. In many cases, this could result in you having a larger loan amount than your new vehicle is worth, unless you are financially able to pay off the difference. Use this Monthly Car Payment Calculator to determine the shortest period that you can afford so that you don’t run the risk of upside down financing.
3. Down Payment Amount. The down payment amount can make a big difference in your monthly payment, and may allow you the possibility of shortening your loan duration. A new vehicle can depreciate in value as much as 20% as soon as you drive it off the lot. If you opt for no down payment, you will now have a car worth about 80% of the sale value, but a loan equal to that of 100% of the ticket price, or more if you choose to finance taxes and fees.
4. Know Your Credit Rating. Your credit rating will determine what interest rates you qualify for and can also make a difference on the amount of down payment that is required. Many lender request a larger up-front amount from higher risk borrowers. Knowing your credit rating will help you get a better idea of what to expect before purchasing a car.
5. Interest Rates. Enter various interest rates into the car financing calculator and see how much of a difference even 0.5% can make. It is definitely worth taking the time to shop around.
Using the Monthly Car Payment Calculator
This car payment calculator is very easy to use and helped me to calculate the monthly payment based on down payment, finance rates, length of loan, etc. I didn’t have any problems using the calculator as I found the instructions provided for using it were very clear.
Posted by: Alice
Fill in the indicated fields:
Vehicle Price ($): If you are able to include taxes and fees, you will get a more accurate calculation. If you do not know these figures, you may want to estimate.
Down payment ($): Enter the amount that you expect to put down on the vehicle. Play around with the numbers to see how much difference a smaller or larger down payment will make both in your monthly payments and total loan amount.
Trade-in allowance ($): Enter the amount that you expect to receive for your used vehicle. If you have not visited a dealership for an estimate, then you can get a good idea by checking the black book value. Also, keep in mind that trade-in values often vary depending on the price of the new vehicle you are purchasing.
Interest Rate (%): Enter the interest rate of the loan that you are considering. Try re-calculating for various rates and compare several loan options.
Number of payments (#months): Remember, the longer the loan length, the more interest you will pay and the less equity you will build in your vehicle.
Once you have filled in all fields, click the “calculate” button to see your monthly payment amount as well as the total loan amount. By clicking the “clear” button, you can re-enter different numbers for further comparison.
Learn More About:
- Using Debt Income Ratios In Debt Management
- The Financial Community’s Recommended Budgeting Guidelines
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