Let’s say your trade-in vehicle is worth $7000, but you still owe $9000 on it (from your previous loan). This is because you might end up paying more than you expected to. However, if you still owe money on the vehicle you’re trading in, then it’s a good idea to use our car financing calculator. If you’re trading in a vehicle that’s worth $7000 and you’re buying a vehicle that’s worth $22,000, then you will only have to take an auto loan out for $15,000 (the difference between your new car’s value and the amount of money you’re getting for trading in your vehicle). Next, consider how much your vehicle is worth if you’re trading it in. So, if you buy a vehicle with 4.99% financing, then you’re paying roughly 5% of your vehicle’s overall price in added interest every year. The interest rate (typically a number between 0 and 29.99%) is the percentage of your purchase that is added to the cost of your vehicle annually. Speaking of interest, the interest rate is the second most important number to consider when structuring a car loan. Why? Because the more time you spend paying off your loan, the more times you will be charged interest. However, due to the interest you’ll be paying on your loan, you’ll actually end up spending more for your vehicle by the time your payments are over. The longer your loan, the less you’ll pay each month, because you’re spreading out the loan amount over a greater number of months.

The factor that will change your monthly payment the most (other than the price of the vehicle) is the loan term. Because, as our auto loan calculator will show you, the price you ultimately end up paying depends on how you structure your deal. The most important number, for you, is the payment. If you’re planning on financing your new vehicle purchase, the overall price of the vehicle isn’t really the number you need to pay attention to. Our car loan calculator can do all the hard work for you. To be totally honest, it’s pretty confusing. But loans come with monthly (or bi-weekly) payments, and it can be hard to figure out how much you’re likely to pay once you factor in things like the loan term, the interest rate, the payment frequency, and the trade-in value. Which means most people need to take out an auto loan in order to buy a car. Even a modestly priced vehicle-let’s say $8,000 to $10,000-is more than most people can afford to pay with cash.

Purchasing a vehicle usually requires a significant financial investment.

New car finance calculator