How to calculate car finance? How to know whether what the rate of interest is that would be charged on the finance you opt for. There is basically lot of tools available to calculate car finance. You can also avail services of experts to get that done. The main objective of calculating car finance is to decide how much you would be required to pay once you buy that car on finance through installments. It depends on people too as to how much they want to pay monthly on auto loan payments. Some want to pay huge amounts so that they get rid of the loan obligations quickly and there are some who are unable to pay huge amounts and opt for an extended amortization period. The following are some of the key ingredients needed for calculating the loan:
1. The vehicle sales price which is the total sales price of the vehicle.
2. The down payment which is initially paid at the beginning as the first installment.
3. Rebate which is the conditional discount given by the company
4. Trade in value which is basically the value the dealer will give for the car provided you apply a loan for another car too.
5. The interest rate which is a portion amount charged on the total value of the car.
6. And the last comes period, which is the number of months in which the loan is expected to be closed.
To calculate this you can either take the help of a financial consultant or you can directly log on to the net where such calculations could be done easily by just adding all the values in the appropriate places which would be there in the site.
Key facts relating car loans:
1. Most of the car loans are on a pre-computed interest rate basis. It means that the bank has already calculated how much interest are you going to pay over the period of the loan. And if in case you pay off the car loan early then the company would pay you back a portion of the already computed interest.
2. In order to buy an automobile on loan, you must have a very strong credit.
3. The loan amount is based on the credit, it is based on much money you are putting down, mileage and year of the vehicle. So the better the credit, the lower the rate and the longer you take to pay off the loan, the higher would be the interest rate.