Know What to Look For in Car Loans: Auto Loan Calculator

Know What to Look For in Car Loans: Auto Loan Calculator

Posted 6.12.2012 in Articles by Jess

Not many people know what to look for when applying for an auto loan so they end up in debt later down the road. Using an auto loan calculator online is super easy and can save you time and money by helping you figure out realistically how much you can afford to spend on a new vehicle. Getting a car loan isn't just about getting the amount of money you asked for, you also need to take a few other things into account before you take those first steps into the dealership. 

The most significant thing while looking for a car loan is the price of the car itself as this is what the loan aggregate is based on. Purchase price of the vehicle basically determines the financial path that one would follow afterwards. That’s why a client should have an exact idea of an ultimate purchase price. Add-ons are included in total purchase price, they include taxes, title or destination transfer fees and all of other options that client selects. An interest rate is then applied on the actual price, it is advised to make a comparison of interest rates by doing a little market search. Interest rates are influenced by many market factors. 

One should be aware of one’s credit score as this is the prime indicator of the credit situation that influences the rate of interest paid on the car loan. It is then important to calculate what a monthly payment would be, especially for those who have to care about the monthly cash flow of their household income; this way monthly payment becomes the only factor that maters in determining the affordability of the loan. Clients should know their car’s trade-in value as it is quite less than what you could have got if you sold the vehicle on your own. Find out your car’s wholesale price to make sure that you are getting fair trade-in value from the dealer. 

It is necessary to know who is funding the loan. If it is financed by the dealer than one often has to pay a higher price as compared to credit union or bank loans. Clients should also consider leasing as an option, which is not a loan technically but an alternate way to finance the car. Auto loan makers tend to sell clients insurance to ensure the payoff in case something happens to him or her. Clients should consider insurance options carefully as it directly adds to the monthly payment. Lastly the length of the loan should be considered; short term car loans are paid faster with a least amount spent on car financing. 

A client has to calculate the monthly household budget to check if enough is left to pay the monthly installment. One should start with basic expenses like grocery and clothing, utility and phone bills, TV and DSL charges, life insurance payment and school or daycare payment. After considering these expenses check for the monthly bills you get regarding credit card payments, student or personal loans, etc. After that add expenses on transportation and entertainment. One might be having other expenses like alimony or child support, etc. or might be having savings like a college fund or retirement fund. All these calculations should give you about 20% of the net income to spare to spend on the car payment. One can do these calculations manually, which can be a tedious task or can use an auto loan calculator facility to handle time consuming financial calculations, which can be quite stressful. Furthermore, it is difficult to be accurate and precise without an auto loan calculator. Once such a calculator gives one correct numbers on many options at hand, one has a fair idea what loan would suit one’s lifestyle. A comprehensive comparison can be drawn, and bad deals can be avoided and decent deals short listed in very little time.

Car loans can be tricky and tempting, but one can get a good deal. If the proper homework is done and modern-day tools are used to draw a comparison between the products available in the market. 

 

 

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