For those looking to purchase a new or used car, there are several factors to first consider before making such a large and involved purchase. First, the obvious ones, you want to choose a car that gets good gas mileage, one that doesn’t have a ton of miles on it if it is used and one that is still running well. Besides these and other personalization touches, you will also want to be able to have a general idea of the interest you will incur on an auto loan if you are using one to purchase your new set of wheels. Even better, you might even want to be able to calculate the interest on your auto loan yourself so that you know exactly what you are getting yourself into for the long haul, especially if your auto loan payments extend over a period of a few years.
Sure, it’s easy to type auto loan interest calculator into an internet search engine and be provided with a whole host of different online calculators that can within a few seconds or less given you a mostly accurate account of what type of interest you are looking at from your auto loan.
Or, you could learn to calculate your own interest from your auto loan, thus giving you the most in depth understanding of what costs are going to come along with buying a new or used car. Here’s how to not get overwhelmed when calculating your interest and be informed about what you are paying for.
First of all, you’re going to need to know a few things prior to starting your interest calculation process. These need to know items are the principal amount you will owe on the car loan, the term agreements of the loan itself and then the interest rate. These will vary person to person so make sure you are using your own personal information and not some average number from the Internet. For basic uses, understand that most auto loan providers used amortization schedules in order to calculate interest. Amortization is a complicated formula to use, so in this case, it would be wise to find such a calculator on the web in order to best figure out your interest rate. Use this calculator to first determine your allotted monthly payment amount.
Obviously, a car loan comes along with the standard amount of paperwork to complete and this is where you can find most of the above needed information. For instance, the interest rate will be explicitly stated on your car loan agreement. Now that you have gathered all the necessary materials, calculating interest is easy. Just simply use the amortization calculator you found online and input your personal information, this means the principal cost (which is also the amount you borrowed in full) and your interest rate from your loan provider. Then you simply choose the time period over which you want to attempt to payback the loan and viola, you have calculated your interest rate for your car loan in a few quick and easy steps.
At Washington Auto Credit we will breakdown your loan for you and show you where your monthly payments are going. If you have any questions about calculating your auto loan interest, give us a call today at 800-836-8884.