How to Calculate Your Car Note

Before you go car shopping, you should determine how much car you can afford. Achieving a monthly payment that works in your budget is a car-shopper's goal, and understanding your spending limits before shopping will save you from falling in love with an automobile you can't afford. The basic principle of calculating interest on loans is to multiply the principle amount of the loan times interest rate times the number of months financed, but in reality, all sort of nuances come into play with an actual loan calculation.

Instructions

1

Pull your credit score to determine if you will qualify for the best interest rates.

2

Check interest rates online to determine what the going rate is for new and used cars, depending on which you are interested in buying. If you have narrowed your car selection down to a brand model, then see if the dealership is offering special financing rates for which you qualify.

3

Perform an Internet search for "car loan calculator." The search will return several selections of free online calculators that will convert loan information into monthly payments.

4

Enter the estimated cost of the car and any other costs you intend to roll into the loan.

5

Enter the interest rate you expect to gain on the loan.

6

Enter a term for the loan based on how long you wish to finance the car.

7

Submit the information and the calculator will return a monthly estimated car payment to you.