Time to buy a car? Use our free Auto Loan Calculator to easily estimate your monthly car payment. See how the term, interest rate, down payment, and trade-in value change your monthly payment.
Also, see below for 5 things you should definitely consider before getting an auto loan.
Estimate your monthly car loan payment
Enter a total loan amount into this auto loan calculator to estimate your monthly payment, or determine your loan amount by car price, trade-in value, and other factors.
Adjust the loan term, down payment amount, and interest rate to see results based on the numbers you provide – and how any changes to those numbers may affect your payment.
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How to use the auto loan calculator
Here’s how to use the auto loan calculator and a look at the different numbers that will make up your car payment.
In this field, put in the price you think you’ll pay for the car after negotiations.
Down payment (if any)
A down payment is the percentage of the car’s purchase price that you pay at the time of sale.
The general rule of thumb is to put down at least 20% for a new car and 10% for a used car.
However, any size down payment can help lower your monthly payments and reduce the amount of interest you pay over the course of the loan.
Trade-in value (if any)
If you plan to trade in your car at the same dealership where you’ll buy your new car, the dealer may apply a trade-in value toward your vehicle purchase.
This would reduce how much you’ll need to borrow.
You can enter the rate you’ve qualified for or estimate your rate based on your credit score using the dropdown menu at the top of the calculator.
Enter the loan term, or how long you plan to take to pay off the loan.
Stretching your car loan payments out over a longer term could reduce your monthly payment, but you’ll likely pay more interest.
There’s no need to search for a “calculate” button. Simply put in your numbers and the results will update immediately.
5 things to consider before getting an Auto Loan
For most people, auto loans are the path to getting a car, whether new or used. Before you sign a note for a car note, it is important to make sure you’ve done your research.
Here’s what you need to know before you shop for your next auto loan:
Know what rate you’re approved for
First, it is important to know your financing options.
That is because how you’ll finance your car should be one of your top priorities before you make your final car selection.
Generally, there are two main two options available:
You can get financing terms ahead of time through a bank or lending institution, or obtain financing at the dealership during the car buying process.
If you choose to work with a bank or lending institution ahead of time, you may be able to save time at the dealership.
However, one thing is true about auto loans – the better your credit history, the better the interest rate you’ll get.
Consider the Term of the Loan
Second, the length of your loan should largely depend on how long you plan to keep your vehicle.
Do you tend to keep your cars for 3 years, 5 years, or 7 years? Longer?
Also, another important factor to consider is whether you’ll owe a balance on a new car loan when you eventually trade in the car you are trying to buy.
For instance, let’s say you keep your cars for an average of 5 years, and you take out a $20,000 vehicle loan.
Having a loan that is 6 years or longer would keep you in debt when you trade in your car.
Do You need a down payment?
If you don’t have the best credit score, you’re likely going to need a down payment, especially if you’re working with a subprime lender.
Also, having good credit means you may not need a down payment.
However, it is always a good idea to put down some money when you buy a car.
That’s because a down payment lowers your monthly payment.
Use an auto loan calculator like the one above to determine how much you’re going to need to put down to get to the payment you want each month.
Zero, Zero Zero is not always a Great Thing
When you see car commercials that advertise Zero down, zero interest, and zero payments for one year, that may sound very tempting.
However, in the long run, you may actually be worse off financially.
Within the first year of these types of payment plans, you may not owe a thing.
Then, you get stuck with above-average interest rates and larger payments.
This happens because in your “first free year,” the dealer isn’t actually paying for your car payment.
You still have to make those payments, except they will be larger and in a shorter time period
Look out for hidden “extras”
Lastly, keep an eye out for things such as rust protection, fabric protection, and tinted windows.
Be sure to cross features such as these off of the invoice if you don’t want them.
If the dealer says it all “comes with the vehicle,” then either walk away or tell them you want one without all the unnecessary extras.
Furthermore, don’t let the dealer talk you into an extended warranty if you don’t want it.
Additionally, extended warranties are very overpriced and, chances are, you don’t need them.
Most new vehicles today come with great factory warranties that cover the vehicle up to 100,000 miles.
Unless you need it to be longer than that, don’t buy it
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