So the painful time has come for you to replace that old, broken down, gas guzzling vehicle you’ve been driving for the past 15 years. You’re probably beginning to look at the great hybrid technology that’s available in some of the popular import vehicles. Great fuel mileage, friendly to the environment and HOV access are all great reasons to purchase a new car. But have you stopped to figure out just how much your monthly payments will be? Good news, you can use a car payment calculator to figure exactly what your payments will be before you purchase. Here are some tips to help you maximize the benefit of an online payment calculator.
Before inputting any information into a payment calculator you will need to know the selling price of the vehicle. If you’re just trying to get a ballpark payment amount, then just input the MSRP (window sticker) dollar amount of the car you are considering purchasing. You may pay slightly more or less depending on the vehicle you end up buying, but this will give you a close from which you can work. To get an even more accurate monthly payment figure, multiply the MSRP price by 10% and add that to MSRP. This will figure in tax, license and registration fees.
What term is best for you? 60 months is the standard auto finance term, but occasionally 72 months isn’t a bad way to go, just be prepared that your interest rate is usually more when you go with longer terms. Sometimes there are special rates when you go short term, 36/48 months. The payment will be higher because of the shorter term, but you will pay less interest in the end. Be sure to look into these short term options as well. Never go longer than 72 months. You will pay too much interest and never get your car paid off. Once you know your desired term, enter that into the “Term” area of the payment calculator.
The interest rate you receive will be based solely on your credit. If you have excellent credit, 740+ FICO score, you will almost always qualify for top tier rates. Once you know the approximate interest rate you have available to you, you will enter that percentage into the calculator.
How much can you afford to put down? It’s not mandatory that you input a down payment amount into most calculators, because not everyone has the money to put down, but as a general rule, figure for every thousand dollars you put down, your payment will be lowered by approximately $20 / month. If you do have money down, or if there is a manufacturer rebate, enter it in the “Down Payment” box on the calculator.
Once you’ve got all of this information properly entered, you will click submit or calculate to get your monthly payment. The great part about these tools is that you can easily go back and adjust any of the variables to figure out just what it will take to get to the payment you want. Doing this before you go visit the car dealership will give you a huge advantage, as you will know exactly what terms will work for your situation, before you get involved in a purchase.