Monthly Car Payment Calculator

Steering yourself to best car financing

Suppose you're seeking the lowest-cost financing deal on a new car and have a choice of several manufacturer incentives, including a cash rebate, low-rate loans and a lease. Figuring which is best can be complicated, the Consumer Reports Money Adviser says.

You need the necessary tools to evaluate auto-financing deals. Consumer Reports Money Adviser crunched the numbers recently. It found the cash rebate is often the lowest-cost option if you can get below-average rates at banks, credit unions or online lenders.

To understand why taking the rebate is often the best choice, you need to look at why the other options cost more.

♦Leasing. In reality, leasing is just another form of financing. Whether you finance a $26,000 car with a lease or a loan, you'll be borrowing $26,000, assuming no down payment. And you'll pay interest on that amount, minus whatever you pay back.

When you take out a loan, you pay back the entire vehicle cost. But with a lease, you pay back only the projected loss in the vehicle's value over the lease term, the so-called depreciation. That results in a much lower monthly payment, which is the reason leasing appears attractive. But it also leaves a larger amount that's not paid back and is therefore subject to a finance charge every month. And though leasing means less out of pocket, it's more expensive overall because you won't own the vehicle after the lease is over, as you would with a car bought with a loan. Also, leases tend to have higher interest rates.

♦Low-interest financing. For this option, the question is whether the savings from the manufacturer's extra-low interest rate more than offsets the amount you'd lose by giving up the cash back. That can be the case if you take the cash and finance the car elsewhere at just an average rate. But if you shop carefully for a rate, you might get the best of both worlds: the cash and a competitive rate that, while not as low as what the manufacturer is offering, provides significant net savings.

That doesn't mean you won't find times in which low-interest financing or even a lease deal is the lowest-cost option. That can happen if an automaker is particularly aggressive with any of its offers. So it pays to check offers carefully. The only way to know if you've got the best deal is to compare numbers.

Why Use a Car Payment Calculator » Car Payment Calculator

Most people loan money to purchase a car. Before committing to a monthly car expense it is important to know just what you can afford to pay without over extending your finances. Using a car payment calculator can help you find the amount you can afford and thereby giving you an idea of the amount you are able to comfortably spend on a car.

Once you know just how much you can afford to spend on a car and have an idea of what the monthly cost will be, you will feel more confident in shopping for a vehicle. Instead of feeling pressured by a salesperson to purchase a vehicle that is more than what your budget can handle, you will be approaching them with a definite amount that you are able to spend.

When you have predetermined the amount of money you can spend on the purchase of a vehicle, you will be narrowing down your search and will look for one in your price range. This will eliminate feelings of disappointment of choosing a car and then finding that you cannot afford it.

When you use a calculator to find out how much you will be able to afford to spend each month for a car, there are a few things to consider. When you figure your monthly expense it is important to include the interest rate on the loan. Do some investigating so that you find a loan with the lowest interest rate for the repayment period that you choose.

Additionally, you will want to include the amount of the license and registration fees. Remember to also add in the state tax fees and any other fees that affect the monthly expense. When you are considering how much you can afford to pay each month for a vehicle it is important to understand that there is more involved than just the sticker price.

Using one of the many calculators on the internet, enter the loan amount for the purchase of the automobile first, then the percentage of the down payment. After that enter the length of the loan and the annual interest rate, and calculate.

After the calculator generates the monthly amount of the loan add in the license and registration fees, the state tax, and any other fees that you know of. The total of these will give you a good approximation of what your monthly cost will be. You may even want to consider car insurance costs. Do some research to get an idea of what it will take to have full coverage on the vehicle you want to purchase.

A car payment calculator provides so much more than just information on how much it will take to repay a loan. To do a thorough calculation and ensure that the payment you end up with will fit into your budget, be sure to consider every fee and cost related to the monthly payment needed for a car. Buying a car, whether it is new or used, requires some serious calculations to make sure that your investment does not become a financial burden.

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