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Calculate Car Finance: How to Use an Auto Loan Calculator for Car Payments
Gone are the days when you leave it up to a car loan company or agent to calculate a car finance quote. Nowadays, you can calculate your own auto loan payments over the Internet. Using an auto loan calculator is easy enough.
Step 1: Enter the Number of Years to Pay
Enter the number of years you want to pay the loan. The monthly loan rate will depend on how long you are willing to pay the car loan. So, the longer the payment term, the lower the monthly rate will be. The auto loan calculator would simply multiply the number of years to 12 to get the average amount you need to pay for each month.
Step 2: Enter the Interest Rate
You then need to enter the maximum interest rate given to you. Interest rates often depend on several things, including your credit score, your financial history or even your location. If you are still shopping around, just get the average of the interest rate you gathered so far to give you an estimate.
Step 3: Deduct the Down Payment
The formula used by car finance companies generally requires you to deduct any down payments you will make. All you need to do is subtract the down payment from the principal amount to get the appropriate monthly payment.
Step 4: Enter the Principal Loan
When you calculate car loan payment for each month, you also need to enter the principal loan or the amount of the car loan. This number is the entire amount loaned or you want to loan from a car financing company.
