How to Figure Out a Car Loan Price

Before securing a loan to purchase a new vehicle, it's important to calculate how much you can afford to pay on a monthly basis. You should stick to that predetermined amount even in the high-pressure venue of a car dealership. By doing due diligence and conducting research before entering the dealership, you will be prepared to stand your ground and stick to your plan if the dealership attempts to engage in aggressive sales tactics such as upping your interest rate immediately before the contract signing.

Instructions

1

Conduct a basic Internet search for a car loan calculator. There are a number of these calculators available for free (see Resources). A good car loan calculator will allow you to see what your monthly payment would be like, accounting for the sale price of the car, a down payment, sales or excise tax, interest rate and term of the loan. You should use a car loan calculator to calculate the effect on your budget from a series of different loan contingencies, such as higher or lower interest rate or extended term of the loan. When calculating the interest rate, your loan's interest rate should not exceed 7 percent if you have a good credit history.

2

Calculate the additional costs that will accompany vehicle ownership. Your new vehicle may require a more expensive insurance policy, which will drive up the cost of the monthly overhead. You should contact your insurance provider and get a quote for the types of cars that you're considering purchasing.

Also make sure that you do a cost comparison of miles per gallon with your old vehicle. A poorer fuel economy will also lead to higher monthly overhead.

3

Visit the dealership. If you become confused while you're there about the impact of the loan on your budget, it's probably wise to simply leave the dealership and recalculate the loan at home. The dealer will almost always be interested in attempting to sell you the car upon your return if you determine that the loan is acceptable. This particular decision will have a long-term impact on your budget, so you can't go wrong with taking your time and doing it right.