Auto Loan Calculators: Your Best Friend at Car-Buying Time

Buying a car is a complex financial process, and you need to enter it with as much information as possible. You’ll need to know both the short term costs of buying your car, and the long term impact on your finances. And that’s why you should use car loan calculators.

Why A Calculator?

Car loan calculators are useful for a number of reasons and in a variety of different ways. First, of course, is the fact that they can give you a rough idea of where an auto loan fits into your budget. Any quality calculator will crunch the numbers and offer up a monthly payment that tells you roughly what you’ll have to come up with to make your minimums every month. That alone is incredibly useful, as you can rule out certain options before you get too far in the process.

The second is that they can help you determine the costs of a loan over time. It’s one thing to see a monthly payment as a lump sum you shell out for every month, and quite another to see the total of what you’re paying over time. Being aware of how much interest you’ll pay will tell you whether or not the loan is worth it.

Thirdly, it can help you spot unethical lenders. If you do the math, and the monthly payment is higher than they claimed, you’ll know to avoid that lender.

Finally, it can give you sense of just how good a deal is with an auto loan. Honestly, it can be hard to sit down and work out the numbers for each loan quote; One may have a smaller monthly payment, but stretch for longer, while another may have a higher payment, and a shorter term, but a slightly higher interest rate. A calculator makes comparing each and every quote a snap, and will help you pick the right loan quickly.

Know all the colors of your auto loan.

So what makes a good auto loan calculator, and what should you have handy to get the most out of it?

Quick Calculations

First, look for a calculator that includes the components of any car loan. You should be able to enter the term of the loan, expressed in months; the total amount you’re borrowing; and your interest rate. This will give you the fullest picture of your loan quote and its costs.

Next, look for a calculator that both tells you the short term costs and what you’ll pay in the long term. An excellent example is Federal Auto Loan’s calculator. Not only will you get the monthly payment for any loan you enter, you’ll also get the loan broken down across the full term, payment by payment. You’ll see exactly how much you’ll pay in interest, how much will go to principal, and this how much your loan will cost you overall.

But regardless of which you use, make a point of using a calculator. In the end, it’ll be a key tool in ensuring you get the best possible loan… and that’s better for everyone.

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