How To Use A Car Loan Calculator

Auto loan

So you want to buy a car and need to figure out how you’re going to be able to manage the monthly payments. Instead of heading to the car dealer and wishing for the best when the finance manager lays out the dollars and cents, make use of a car loan calculator first.

The benefits of doing so include giving you more peace of mind over your intended purchase, providing different scenarios that you can adjust to bring the monthly payment more in line with your financial situation, and alternatives that you can plan for, as in allocating more of a down payment to bring the monthly payment down.

How do you use a car loan calculator? Here are some of the basic steps:

  • Visit several websites offering car loan calculators. You can go directly to or perform a Google or Bing search for “car loan calculator” or “auto loan calculator.” Then spend a little time familiarizing yourself with the tool.
  • Input the details. These include the loan amount, including taxes and other charges, down payment, length of loan and interest rate.
  • Press search. The car loan calculator will give you an immediate result.
  • Evaluate the results. Don’t be discouraged if the monthly payment is more than you’re comfortable with. Play around with different scenarios, such as extending the length of the loan from 36 or 48 months to 60 or 72 months. See how much less your monthly payment will be if you put more money down to reduce the total amount financed.

Note that some car loan calculators also have a field to put in the estimated trade-in value of your current vehicle.

With a little practice modifying the various input fields, you should be able to find a monthly payment that fits your needs and your budget. It may mean that you need to adjust your vehicle of choice to a slightly less expensive model, or buy one that’s used. It may mean you put off buying the new car for a few months while you save money for a larger down payment.

In the end, though, taking the time to figure out how a new car purchase translates to a fixed monthly budgetary expense  before you get your heart set on a particular vehicle will be well worth it.


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