Before buying a car, it is best to know just what you can afford. By calculating an auto loan you can see how much you will owe monthly, depending on other factors such as your interest rate, down-payment amount and the term of the loan. The following steps will help you calculate an auto loan to better prepare you for your new auto purchase.
Things You'll Need
- Loan amount
- Term of the loan
- Interest rate
Visit Bankrate's website to use their auto loan calculator. This is a very popular and resourceful tool found on many sites and used by many people when in the process of shopping for a new auto. It can make understanding all the numbers and figures a whole lot easier for you (see Resources below).
If you already know the loan amount, you can enter it in the first box. Even if you aren't completely sure of the amount, use a reasonable ballpark amount to give you an idea.
Enter the term of the loan. This could be a monthly term or a yearly term up to 10 years or more. Many people will choose the shortest term they can afford, but you can always re-finance later down the road to lower your payments. If you want, enter a few different term lengths so you can compare the final outcome.
Enter the interest rate. Your interest rate will normally depend on your credit rating. If you are worried about the rating you might qualify for, you should consider checking your credit rating by obtaining a credit report. You are entitled to a free report every year from major companies like Experian and TransUnion. You might be able to clean it up before applying for a loan so you can get a lower interest rate (see Resources below).
Once you enter the required information in the correct fields, click on "Show/Recalculate Amortization Table" to see your monthly payment. You can also add any additional or extra payments below the calculator.
Tips & Warnings
- Do not apply to many different places just to try and get approved. Each time you apply for any type of loan, including an auto loan, it reflects on your credit rating.
- Photo Credit www.ecarloanguru.com
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