Use Car Loan Payment Calculator To Assess Monthly Payments

2007-03-08 10:33:40

( Financial )



Some financial planners may recommend that you purchase a car using cash instead of taking out a car loan. Since the car's value depreciates quickly, and the advantage of tax deductibility in mortgages is not present in a car loan, it may make sense to pay the car with your own funds. The drawback is that you will no longer have these funds in times of emergency.

If you don't have the cash for the purchase price of the car, you should determine the amount of monthly amortization that you can afford, even before you shop around. Like calculating mortgage payments, you should take into consideration your net income from all available sources. You should not allow your projected monthly car loan payment to exceed twenty-percent of your net income.

After you have calculated the amount you can spare for the monthly car loan, you must estimate the price of the vehicle you want. To assess your monthly amortization, you can then resort to a car loan payment calculator which can easily be found over the Internet. You will just have to supply the data for the car's price, length of the loan, interest rate and your down payment to the car loan payment calculator.

If you take time to add all the monthly payments you have to make, you will notice that the length of the loan and the interest rates affect the overall cost in a big way. You have to equip yourself with the data you get from the car loan payment calculator when you talk to car dealers because they will usually try to devise a longer loan schedule to present an image of car affordability. You should tell them your maximum monthly budget for car financing so that they know that you have done your homework and can adjust the life of the loan.


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