Shopping for a new car can be a stressful experience, and many just aren’t sure how their personal finances are going to stack up against the cost of a new car. Car loan calculators can help shoppers learn exactly how much car they can afford, and give them an idea of what they should be looking for before they ever step out on the lot at a dealership. These are terrific financial tools for those who want to avoid going in blind when car shopping.
What is a loan calculator?
There are several types of car loan calculators, some of them will calculate the cost of a purchase and others will calculate the cost to lease a car. In a lease, a buyer is going to pay to use the car for a specified period of time, and so they are really only purchasing part of the car. Some will even allow people to factor in negative equity from a previous purchase. Generally, these calculators will allow people to put in the amount of money that they would be financing, the amount of money they anticipate putting as a down-payment and the interest rate they anticipate getting. Some will even have a simulator that will allow shoppers to estimate their credit score, which can give them a better idea of what interest rate they might be able to get.
What do you use the calculator for?
Once all of this information has been entered into the calculator, it will then generate what the monthly payment will be for this loan. Some will also do this in reverse, it will take the desired monthly payment and let people know how much money they could finance if they were to pay that much each month. It is very easy to manipulate these and see just how much the rate can change with even small differences in the downpayment and the interest rate.
Bad Credit Can Limit Loan Options
Using an auto loan calculator can be very eye opening, and it may help some to see that they need to back off a little bit and go for a vehicle that is more in their price range. Also, those who have poor credit may find that they are not even able to qualify for an auto loan. In some cases, even if they can qualify for a loan it comes at an extremely high interest rate. Those who find that they have a very low credit rating may want to wait and build their credit score before they apply for an auto loan.
Good Credit Can Bring Interest Rates Down
Those who have excellent credit can use this calculator to see how a low interest rate can really help to lower their monthly payment. Many will find that the lowest interest rates come from buying a new car, but those who have terrific credit may be able to get a better when they are purchasing something used. Those who are leasing a car and have great credit will also be able to get their monthly lease payment lower as well. Shoppers who want to make sure that they know where they stand before they speak with a car salesperson should hop online to a car loan calculator and see where they stand with their credit and learn just how much car they can afford.