Here's How to Make Sure You Don't Overpay for Your Car and Car Loan
If you’re thinking of buying a new or pre-owned car but aren’t sure how much of a monthly payment you can afford, Finex’s Auto Loan Calculator is a great tool to help you learn more about the car buying process and monthly payments.
Decoding the Auto Loan Calculator
An auto loan calculator is an online banking tool that allows you to see all of your options before you commit to buying a car. It provides important information about your loan and vehicle purchase so that you can determine how much you can afford to spend and what the monthly payment will be.
While an auto loan calculator can't provide the loan details you qualify for, you can enter the loan amount, interest rate, and terms to determine a monthly payment for a variety of different scenarios. This allows car buyers to prepare financially for vehicle purchases, so they know exactly what to expect while shopping.
Revealing Potential Savings
By utilizing an auto loan calculator, savvy car buyers can walk onto the dealership lot with valuable information that can assist with their auto purchase. Knowing how to save money by being aware of how different loan terms and interest rates affect the money you spend and the amount of your payment means knowing if the car you want is within your budget.
Just changing the loan terms and interest rate while using the Auto Loan calculator will show you the different payment options you have and what rate and terms are required to keep your payment where you need it to be. For example, a $20k car loan at 6% for 4 years has a monthly payment of around $470 while a $20k car loan at 6% for 6 years has a monthly payment of only $331. This also provides a powerful tool when negotiating the price of a car.
Strategy for Early Loan Payoff
In addition to preparing you for your car purchase, an auto loan calculator can also give you a strategy for early loan repayment. By entering the necessary criteria, you'll see how much extra you would need to pay each month to do so.
Financial Advantages of Paying Off an Auto Loan Early
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Save on interest
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Improve insurance options
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Save money on monthly payments
Improve debt-to-income ratio and potentially increase credit score
To take the mystery out of car buying and car loans, download our free eBook:
Car Loans 101: Car Buying Made Easy
Advantages of an Auto Loan Calculator
Auto loan calculators offer several advantages for car buyers and owners. They're a comprehensive financial planning tool that allows you to make informed decisions by determining the cost of your monthly car payment or payoff. In addition, the calculator can help you determine your budget and allows you to compare different financing options to fit your unique financial situation.
Optimal Timing for Early Auto Loan Payoff
If you're considering paying off your auto loan early, it's important to determine exactly when early repayment makes financial sense. This includes balancing early payoff with other financial responsibilities. It's a good time to consider ridding yourself of this debt if:
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You don't have other high-interest debt, like credit cards
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The interest rate on the loan is high
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A lower debt-to-income ratio is needed for a home purchase
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You need to free up cash for other financial goals
Weighing Early Auto Loan Payoff
There are pros and cons to each scenario regarding early auto loan payoffs. Consider these examples before paying off your auto loan early.
Pros of an Early Loan Payoff
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More cashflow with no monthly car payment
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Credit score improvement
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Save on interest
Cons of an Early Loan Payoff
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Possible prepayment penalties
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Stretching a tight budget to make the early payoff
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The urge to buy a new vehicle
Refinancing Options with Finex
If you already have an auto loan somewhere else, it may be a smart financial move to refinance with Finex Credit Union. Reasons to consider refinancing your auto loan include lowering a high-interest rate, freeing up cash in your monthly budget, or reducing your debt-to-income ratio.
Whether you want to purchase a new or pre-owned vehicle, or refinance an existing high-rate loan, Finex can help! Contact us today to learn more about our auto buying and refinancing auto loan options.
For more details on the ways an auto loan calculator can impact your overall car buying journey and more tips to save you time and money, review our "Car Loans 101: Car Buying Made Easy" complete guide!
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