Use this calculator to compare monthly payments given the six most popular auto loan lengths.
Enter the amount financed and the interest rate, then click the "Compute Payment Amounts" button.
What Is the True Cost of Time?
Car-buyers are faced with a variety of decisions as they contemplate ownership and arrange to purchase automobiles. In addition to determining the correct makes and models for their driving habits, financing concerns are pressing.
Unless they can be made out of pocket, funding major purchases requires consumers to borrow money, so today's automotive lending market provides a wide variety of options for buyers to consider. Loan-terms are offered for a range of repayment lengths, from a couple to several years, furnishing flexible financing options for diverse budgetary requirements. Before moving forward with financing selections, buyers evaluate the costs of purchasing vehicles and keeping them on the road, accounting for myriad operational expenses and repayment alternatives. Establishing a broad view of operating expenses and overall financing costs helps car-buyers choose between 3, 4, 5, 6, or 7-year financing options extended by car dealerships.
The Real Cost of Driving
At purchase time, short-term financing options often appear best, removing ongoing vehicle expenses from your budget ledger as quickly as possible. But the costs of driving go beyond the purchase price and interest owed, prompting further evaluation before committing to financing deals.
Mechanical issues add to vehicle costs over time, requiring repairs and maintenance not always easy to predict. While newer cars are more reliable than older ones, even they are not without routine upkeep requirements. There is no precise balance point available to lean on when evaluating vehicle age and life expectancy. Where you live, how you drive, and the way your used car was treated before you bought it each have significant impacts on how it will perform for you. When budgeting though, and choosing between variable length automobile financing options, it is prudent to leave a cushion for unanticipated expenses. If your entire monthly transportation allowance goes toward fixed costs, you'll be hard-pressed to address pop-up repair needs and other maintenance expenses.
Insurance is another variable influencing overall vehicle costs. Before committing to repayment terms, prudent car-buyers assess insurance costs. Because high-performance and luxury vehicles are insured at higher rates, the cost of coverage impacts the amount of money available to cover monthly car payments. Buyers surprised by high insurance rates step-in to longer length vehicle loans, in order to lower their payments.
While they might seem less significant than other costs, vehicle licensing and registration fees are nonetheless meaty budget entries to be considered as you contemplate vehicle financing. Fixed costs like these are easy to evaluate, so there is no excuse for coming-up short on your analysis. Even sales tax can be anticipated, using the rates applied in your locality.
Extended warranties and aftermarket purchases provide additional food for thought, taking their place beside other transportation costs. Like gasoline, these expenses are subject to discretion. To figure out which loan term is best for you, calculate the number of miles you drive each month, before plugging-in your vehicle mileage rating to determine how much gas you'll need. Then, use prevailing gas prices to translate your figures into actual dollars spent monthly. Once tabulated, compare your monthly affordability index with various repayment terms explored using the car loan term payment calculator.