How Do I Calculate A Car Payment?

By on June 25, 2010 in ArticlesHow Much Does

How do you calculate a car payment? There are a number of easy to use tools online you can use to calculate the amount. Many of these types of online tools allow you to also compare auto rates, view loan types for your car and more. Calculating prices for new cars, compared to used cars, may be slightly different. Looking over the various websites listed here will help you find the right auto calculator for your situation.

Auto calculators online generally give you a form where you type in the loan amount (how much the total is you are paying for the car), the auto loan term (how many months you will be paying on the car), the interest rate on the loan (the interest rate percentage per year) and the auto loan start date. From there, the form calculates your monthly payment. Some auto calculators include advanced information on the form for the loan type (new car, used car, refinance of car), the down payment towards the car, the trade-in value and the amount owed on trade-in.

Leasing a car for personal or business reasons requires a few more bits of information, in order to calculate a payment. Your lease payment amount is a function of your down payment, your monthly payments of principal and interest, and the residual value of the vehicle at the end of the lease term. A leased vehicle has wear and tear on the car – an estimate of cost will include wear and tear, an estimate of mileage to be driven (miles driven per year) and a security deposit may be required. For a business, sometimes it makes sense for business owners to lease a car, not buy. Typically you can expense a lease payment, whereas a car purchase is a capital item. Consult your tax professional for more details.

To calculate your car payment:

1. Begin by determining what your down payment will be. If you have a vehicle you will be trading in, add in your trade-in value. Use the sticker price of the car as the highest price, to see the worse case scenario.

2. Subtract the down payment amount from your trade in and the sticker price of the car for a total amount. The amount you come up with will be the amount you'll need to finance.

3. Decide how many months (24 months to 60 months) you will take to pay off the car. Divide the amount after the down payment by the number of months you want to pay.

This should provide you with an estimate of your monthly car payment. Use car payment calculators to get an exact amount for your monthly car payment.

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