Auto Loans Calculator

We all know that when you go in for a loan, you will be told an amount that you are expected to repay on a monthly basis. It may seem like this number is just a magic number that the car salesman or bank loan officer pulls out of a hat, but this is not the case at all. There is a certain formula that has been used for years in determining how much your payment will be when you take a loan. It is universal for all loans and can be used as an auto loans calculator, a home loans calculator or a calculator for any other type of loan as well.

The formula requires the input of several pieces of data in order to output the monthly payment amount. First, the amount of the loan is considered. This is multiplied by the interest rate and multiplied exponentially by the number of months over which the loan will be repaid.

Once you know all of the elements of the auto loans calculator, you know how to use them to advantage and get the best monthly payment possible. For example, the most obvious thing you can do is to decrease the principal value of the loan. This can be done in one of two ways. You could choose a less expensive car and therefore have to borrow less money. Or, if you are set on the more expensive car, then you could make a larger down payment. This would also decrease the amount that you are borrowing, and would still allow you to get the car that you really want.

Another way to manipulate the auto loans calculator to your own advantage is to consider lengthening the terms of the loan and repaying it over a greater number of months or years. Check with your lender to see if they offer you this option. Be forewarned though: This is not the best way to lower your monthly payment. While it will decrease your payment, it will also create a longer period of time over which interest charges accrue.

This means that even though your monthly payments are lower, you will in the long run pay a greater amount of money to the lender. It may not even lower your monthly payment as much as you would expect, the extra interest fees nearly replace the amount that gets taken off. With that in mind, be careful that you don't get roped in to a loan that you could pay off quicker than they are allowing you to. Sometimes the monthly payment on a ten-year loan is only slightly more than on an eight or even five year loan.

Lastly, you can lower your monthly payment by getting a lower interest rate. This is often your best bet, as lenders can sometimes negotiate with you on the interest rate. Sometimes there are incentives to this as well. For example, they may offer a better interest rate on a new car than on a used car, or a better interest rate on a longer loan. Whatever the situation, always figure out what will save you the most money. The lenders have the mathematics all figured out and worked in their favor. The more you know, the better your chances of tipping the scales in your own favor.