How to Calculate Your Auto Loan
Everyone needs a car, especially when you have a family, because travelling on public transport with kids can be a very exhausting experience. However, taking into account the financial challenges in the modern world, it gets extremely difficult to save money for a car. This is the reason why many people lease cars through banks or take auto loans.
Whether you are buying a new car or a used one, you must calculate the auto loan payments to make sure they fit your budget, even if you are signing a loan through a dealer, bank, credit union or any other lending institution.
Instructions
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1
Make an Excel file to calculate
Use the =PMT function, which calculates a $15,090 loan for a length of four years (48 months payments) at seven percent interest rate. On an Excel sheet, enter the below given descriptions in the initial four rows of column A:
Rate
Number of Payments
Present Value
Future Value
Now enter the numbers given below to the descriptions in column B:
7.00%
48
15,090
Zero
In the cell below the numbers, enter the formula “=PMT(B1/12,B2,B3,B4)”. Now you need to follow these steps:
Enter “=PMT” and click on the cell with 7.00% and “B1” appears after the left parentheses.
Enter “/12,” (do not forget to include the comma) and click on the cell with 48 and “B2” will appear.
After “B2”, use a comma and click on the cell with 15,090. You will see “B3”now.
Now use a comma after “B3” and click on the cell with 0 and “B4” will appear as a result.
To finish the formula, use a right parenthesis at the end
Now press the ‘Enter’ key and you will see the monthly payment, which will be $361.35 according to these numbers. -
2
Determine sales tax
Before signing for an auto loan, you should determine the amount of sales tax according to your state and add it to the approximate purchase price. For instance, if your state charges 7 percent sales tax on a purchase price of $15,000, you will end up paying $16,050, after adding up $1,050 in shape of tax.
You must also go through your state laws thoroughly because they wary in every region. If applicable, you should also deduct the trade-in value of the car’s price. -
3
Add all the fees
The dealer and the creditors charge many fees like preparing the vehicle for sale, handling the loan and destination fee. Add all these fees to the amount you will end up paying. -
4
Down payment
While calculating the loan, do not forget to subtract the down payment from the load. In order to pay less in the long run every month, many people prefer to pay a higher down payment. It will save you a lot of money as you will be paying less in interest as well.
