![]() To help you figure out how much you can spend on your vehicle purchase, our experts recommend that your monthly auto loan payment be no more than 10% to 15% of your take-home pay. ![]() Purchase price : This is the actual amount you pay to purchase your vehicle, after any discounts or rebates.Here are explanations of some popular auto loan terms you may see when using a car loan calculator or shopping around for auto loan rates: The graph below shows average interest rates for new and used cars, according to Experian’s Q2 2022 State of the Automotive Finance Market report. Borrowers with credit scores higher than 660 tend to receive lower interest rates than those who have credit scores below that number. The auto loan rates you’re offered depend largely on your credit score. The longer the loan term or the higher the interest rate, the more you’ll pay. Total interest paid : This is the total amount of interest you’ll pay over the life of the loan.Principal amount : This is the amount of money you’ll borrow to finance your auto purchase.Part of each monthly payment goes toward the actual amount owed, called principal, and the other part goes toward interest. Monthly payment : This is the amount you would pay each month for the duration of your car loan.You can use reputable websites like Kelley Blue Book or CarMax to find your vehicle’s trade-in or resale value.Īfter you input the details above, the auto loan calculator will typically display the following results: Trade-in value and down payment : Enter the total cash value of your current vehicle or the amount of your down payment in these fields.If the calculator you’re using doesn’t include this feature, you can check online lenders and banks for rates. Interest rates : Some auto loan calculators ask for your credit score to help determine what interest rate you may qualify for.Having a shorter loan term means a higher monthly payment but less interest paid overall. ![]() In general, choosing a longer term will lower your monthly payment, but you’ll pay more in interest.
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