When shopping for an auto loan, money is foremost on your mind, for obvious reasons. And you need every tool you can get to figure out which loan is the best. Here’s why, before you fill out an application or look at cars, you should first become familiar with the auto loan calculator.
It Makes Comparing Quotes A Snap
Most of us, when financing a car, find ourselves facing a whole bunch of quotes and not having any good way to compare them. If you can borrow $10,000 at 5% interest over a 60-month term, is that a better deal that borrowing $8,000 at 4% interest over a 24-month term? Most of us didn’t enjoy word problems in high school, and we really don’t enjoy them when it’s our money on the line.
Auto loan calculators make it simple. Just enter the quote, write down the results, and compare the impact on your budget.
It Helps You Stay On Budget
If you’re like many people, you’re probably looking closely at the monthly payment of your loan before anything else. But not every quote you receive will offer that information as part of the paperwork. With an auto loan calculator, it’s as simple as entering the terms of the quote and letting it grind the numbers, or even entering different sets of numbers yourself and seeing how they work out monthly. That way, you’ll know if a loan is right for your monthly budget, or whether you need to find better financing elsewhere.
It Helps You Think In The Long Term
But you shouldn’t just be focused on the monthly impact of your auto loan. You need to think about the long term, as well. For example, if you add a few months to your loan term, that might lower your monthly payment … but how much more interest will you pay? How much more will that extra year really cost you? And can you really swallow that interest rate five years from now?
An auto loan calculator will often include a monthly breakdown of each payment; how much interest is paid, how much goes towards the principal, and how much you’ve paid overall. It’s the smart way to track when you spend on your car, before you spend it.
It Lets You Double Check The Math
An auto loan quote can sometimes show up with what is claimed to be a full set of numbers … but you should always double-check, as there can be mistakes or inaccuracies. An auto loan calculator will let you line up the numbers and see for yourself how they work out.
It Gives You Peace Of Mind
One of the reason auto financing is so intimidating even to those of us with perfect finances and pristine credit is that it can feel like a black box; you get a bunch of numbers and a few indications of what they say, but it can feel a bit like you don’t have any control. By using an auto loan calculator, you’ve got the tools to figure out your financing, and take control of your financing.