How To Calculate Your Loan Payment

When you go to buy a car, you very rarely pay straight cash upfront. This means that you are likely going to need a loan, which means that you need to be able to figure out your monthly payment. Here are a few ways you can go about doing this.

Determine Cost Of The Car
The first thing you need to do is to determine how much you car is going to cost. You can either put in the cost of the car and then divide by how many months you want to repay the loan, or you can put in a monthly figure and let a calculator determine how much car you can afford. Remember that a lease is going to be priced differently than buying an automobile.

Think About Your Credit Score And Possible Interest Rate
When you go to calculate the cost of a car, you shouldn’t just take the price and divide by 60 months. You have to understand that there will be an interest rate and most likely a down payment. Depending on your credit score, you might be able to get an interest free loan. However, you should expect to pay at least 3 percent APR on your loan.

Estimate Your Down Payment Or Trade-In
Your down payment is going to reduce the price of the car, so make sure to estimate that. Go to car sites and other sources to estimate a price for your car based on its condition. The more valuable the trade in, the less money you are going to pay for your car.

The next time you go to buy a car, you should have a good idea of how much you want to spend and how much you can afford each month. Consider your credit score, down payment and whether you want to lease or buy and go to the dealer with some confidence.