Car shopping should be exciting, but when you’re in the middle of so many decisions it can really feel like there’s no way that you’ll ever see the finish line. Now, does it really have to be that way? Of course not! You can definitely find the financing you need, along with the car of your dreams — it just might take a little more planning than you might expect. When you know that you need to get things done and you need a car to do it, time is definitely of the essence. You just need a system to work with, and some tools that can keep you in line when everyone is encouraging you to go out of your budget.
Of course, it goes without saying that you really don’t want to give into that temptation. Why would you want to be car rich and cash poor? That car can’t help you get extra money in most cases — in fact, it’s going to be a drain on your finances in some way when you really think about the total cost of ownership. This is why you have to take so much time planning for the car that you want, along with the financing you need.
First and foremost, if you take nothing else from this guide, you should really consider using a car loan calculator on your own. You don’t want to wait until you’re at the dealership, because that’s just extra stress that you really don’t need. If you really want to get things done, you will need to take action by getting the best budgeting tool you can get on your side.
The best part about a car loan calculator is that it’s free — no, you don’t need to shell out a lot of money just to get something that can tell you a good estimate of what you should be paying every month from the car. You need to make sure that you get this tool sooner than later, of course.
So, what’s so special about a car loan calculator? Well, in a nutshell it takes all of the components of your car loan and it generates a total that you will need to calculate into your monthly budget. The basic fields for a car loan calculator include the total amount of the loan, the interest rate, and the term of the loan. The longer your term, the lower your monthly payment will be. Generally speaking, the longest that you can keep a car loan around is 72 months, but there have been reports of longer terms being offered to buyers.
Once you enter in all of your information, you will know the monthly payment that you can expect. However, what about that pesky interest rate? Well, it just depends on your credit. If you know that you have great credit, then you can get away with a 5% interest rate. However, if you know that your credit could be better, you might want to estimate 10-15% on your car loan. It just depends on your actual credit score. As you can tell, better credit means a lower interest rate. There are sometimes deals where you only have to pay 1% in interest for the life of the loan — but those are reserved for the best credit risks around, so if you really want to make sure that you get a car loan on the cheap it pays to look at your credit!
Overall, it’s a good time to look into budgeting for and saving up for those car payments. Having a nice new car is great, but armed with a car loan calculator you can actually make sure that you afford it!