With so many loans out there, deciding which one to choose can be difficult. So many different loans, so many lenders, so many loan terms, and so many interest rates – which can make it very difficult to compare loans to find the best deal and the most suitable option.
That’s where car loan calculators come in. Using a car loan finance calculator, you can compare a number of different loans, and find out which one is cheapest, and which one best suits your budget. You can even use a car loan calculator to work out an affordable monthly repayment schedule.
What should you look for in a loan?
Before you start comparing car loans, you need to work out what to look for in a loan. The first thing most people look at is the loan’s interest rate. This gives you a good starting point for comparison, and you would generally opt for the loan offering the lowest interest rate.
However, you also need to look at loan terms. A loan with a lower interest rate borrowed over a longer period of time may end up being more expensive than a loan with a slightly higher interest rate borrowed over a shorter period of time.
You should also look at the fees on the loan. Some lenders charge application fees and monthly fees over the course of the loan. Some lenders charge early repayment fees, late fees and so on. It’s important to factor in the cost of the fees to find out the overall cost of the loan.
It can be a good idea to think about loan features as well. If you want to make extra repayments, or pay off the loan early, look for a loan that will allow for that.
Using a car loan calculator to work out a budget
Before you take out a car loan, you need to work out what you can afford. Start off by creating a budget that includes all income and expenses. This can help you work out how much you can spare for your monthly car loan repayment.
Use the car loan calculator to try out different repayment schedules (many calculators will offer a graph or a table showing the repayment breakdown over the length of the loan), so you can find the one that is most affordable, that allows you to repay the loan over the shortest period of time.
Using a car loan calculator to compare loans
The most popular way to use a car loan calculator is for car loan comparison. Different loans attract different interest rates, have varying fees, and are borrowed over different periods of time. You can’t rely on the interest rate alone when comparing loans, you have to compare the overall cost of the loan.
Car loan calculators make it easy to compare the overall cost of the loan, so you can find the most affordable option for you. One that fits within your budget, that costs you the least overall, and is borrowed over the shortest period of time.
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image courtesy of Stuart Miles, FreeDigitalPhotos.net
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