What is an Auto Loan Calculator?

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  • Written By: wiseGEEK Writer
  • Edited By: O. Wallace
  • Last Modified Date: 22 January 2020
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An auto loan calculator can be a useful tool for determining amount of monthly payments for most types of auto loans. Essentially, most are equipped at calculating amount of payment based on annual percentage rate (APR) of interest, total amount of the loan, and length of the loan. When this information is entered into designated boxes, the expected monthly payment is quickly calculated.

Some websites that offer an auto loan calculator are trying to sell consumers a loan or other services like credit repair. A few ask for more details than are needed to arrive at the expected monthly payment. It only takes a few moments searching to find an auto loan calculator site that won’t ask for more than the relevant details required to compute monthly payment. It’s generally worth the search to avoid sacrificing personal information or having to put up with spam email or sales calls.


Those who jealously guard their privacy can easily compute monthly payment amount with a basic formula. It can take some time to make calculations though, even with a calculator. One advantage to using an online auto loan calculator is that it can be used comparatively to look at how payments change when loan length, interest rate or price of a car changes. These comparisons can assist consumers in deciding how much of a car they can afford, and at what terms and interest they can afford it. This can prove useful when negotiating with car vendors, especially when done in advance before the attraction of a beautiful new car interferes with sound economic judgment.

Knowing what’s affordable can also empower the lender to see what loans best fit their needs. For instance, an auto loan calculator might compute total amount of interest paid over the length of the loan. Total amount paid for a car is higher when loan length is longer. Though payments may be lower in a longer length loan, extra interest paid can be significant, and if the consumer can afford a slightly higher payment, they can advocate for a shorter loan that means they’ll pay less money over time.

An additional reason why an auto loan calculator may prove helpful is when comparing loan offers. Often people simply accept loan deals from the car seller, and this may not be the best car loan they can get. Shoppers can ask exactly what percentage of interest they will pay when a loan is offered through a car seller and see if this is truly the best.

These calculators aren’t magic and those who are unused to owning a car should understand that they don’t completely give information about how much car ownership costs. To the amounts generated from an auto loan calculator, a person should also add expected monthly payments for insurance, gas, vehicle repair and maintenance, and any storage fees. Another thing that probably needs to be added in is cost of yearly registration. These things can significantly add to the cost of owning a car and need to be considered as a person thinks about affordable monthly payments that will fit within a certain budget.



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