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Car Loan Calculator | Auto Loan Calculator |
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The term car loan calculator is used to describe a special type of financial calculator that allows the calculation of monthly car loan payments and other costs. It is not practical or easy to calculate auto loan payments with a conventional calculator. A special business calculator or online loan calculator is required. In order to calculate car loan payments, you must first know the negotiated vehicle price, cost of any added options, trade-in allowance, balance of any outstanding loans, tax rates, and fees. A good loan calculator will then use your inputs to accurately compute your monthly payment amount and total loan costs. An auto loan is always amortized over a loan term (months), meaning that each month's payment contains both a principle amount, which pays down the amount borrowed, and an interest amount, which is a finance charge. Since interest is charged on outstanding loan balance, the amount of interest in each monthly payment becomes smaller and smaller each month as the outstanding balance decreases. However, to keep the payment constant, the principle amount increases each month. This means you pay off your loan faster in the last half of your loan term than in the first half. Or, said another way, most of the total interest is paid during the first half. The method by which auto loans are calculated by dealers and finance companies is not so simple that it can easily be done on a drugstore-variety calculator. It requires either a business finance calculator or an online calculator specifically designed for Time Value of Money (TVM) types of calculations. An excellent example of an online calculator is the New-Car Loan Calculator provided by LeaseGuide.com. It can be used online or downloaded for use any time on your computer. Another, more useful for used-car loans, is the Used-Car Loan Calculator. For more information, see: The Lease Guide
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