Car Loan Calculator
One of the best financial decisions you can make as you set out to buy a car is to know for sure up front how much you can reasonably afford to pay each month for car loan repayments. The best possible way to do this is with the use of a car loan calculator.
Most people who decide to buy a car can’t wait to rush out to the car dealers and test drive cars. This is a natural emotional reaction but it can result in becoming emotionally involved with a car you cannot afford and overburdening your monthly budget, leading to the shiny new car becoming a burden around your neck and eventually being repossessed and wrecking your credit. A few hours spent with a car loan calculator will ensure this does not happen.
The problem with rushing out to the dealer is that you will most likely fall in love with a car that is way out of your price range. You will however find a way of overcoming your natural instincts that are screaming at you to run and hide and because the car dealer doesn’t care how you are going to be able to afford the monthly car loan payments he will do everything in his power to ensure that you drive this millstone off his lot. The salesmans job is to sell cars not to ensure that you can afford it. A car loan calculator will tell how much car you what you can afford
The sensible way to buy a new car is to sit down with a large note pad, a car loan calcualtor and follow the steps below
Car Loan Calculator-New Car Purchase Step 1
- Your current monthly outgoings. Take time and make sure you include everything.
- Your current monthly income. For most people this is simply your monthly take home pay.
Subtract your outgoings from your take home pay. This is whats left over to service your car ownership costs. We will call this ammount ”A”.
Car Loan Calculator-New Car Purchase Step 2
Next write down the estimate costs of owning a car
- Monthly repayments
- Insurance
- Taxes
- Running costs including fuel and maintenance
Total up these amounts and we will this amount “B”
If the total of your estimated running costs “B” exceeds your available monthly funds “A” then you cannot afford a car in the price range you are currently considering.
This is where the car loan calculator come into play. It will tell you what monthly car loan repayment you can afford .
Car Loan Calculator-How to Use a Car Loan Calculator
You already know how much you have available each month for a car loan payment it is “A” from Step 1 above.
In step 2 list
- Insurance
- Taxes
- Running costs including fuel and maintenance.
Subtract this amount from amount “A” above. The result is the maximum you can afford for your monthly car loan repayments.
For example if a prospective car buyer had 1000 left over per month to service a car payment and ownership costs and the cost of running a car without where estimated at 300 without the actual car repayment the there would be 700 available to pay the monthly car loan repayments.
Using the car loan calculator below you can find the price range of car that fits into your monthly budget. You will need to know the car loan interest rate that you will be charged and also the term of your car loan in months.
