Determining your monthly car payment is more complicated than taking the amount of the loan and dividing by the number of months. This method doesnt take into account the considerable sum added by the interest, taxes, and other fees. 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. 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.
Inputting accurate answers is essential to using an auto loan calculator. Tiny variations can add up to big differences in your monthly payment. When in doubt, be conservative. 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. When you go into the dealership or the bank to get funding, you will need to negotiate, and it will help you immensely to know how all the options you are offered will affect your pocketbook.
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 $17,424 over the life of the loan. If you pay off the loan over five years, your monthly payments drop to $319, but the amount you ultimately pay rises to $19,140. An auto loan calculator that calculates the total amount of the loan as well as the monthly payment is a great way to avoid being penny wise and pound foolish.
Getting a car is an important decision. 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 remove a lot of the stress from getting auto financing. Good luck, and happy shopping! See more Discount car insurance . Affordable auto insurance . Car insurance .

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