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4 Tips You Should Know When Using an Auto Loan Calculator

family at car dealership

Here's How to Make Sure You Don't Overpay for Your Car and Car Loan

Everyone wants to get the best price on their next car purchase. Finding a car with the right price is the first step, but you'll also need to carefully consider your loan. An auto loan calculator is a helpful tool to use as you analyze car loans. This tool allows you to input the vehicle's price, loan term, and interest rate, as well as other fees and costs, to see both the monthly payment and total cost of the loan over its lifetime. With this knowledge you can avoid overpaying not only for the car itself, but also for the loan. If you've never used an auto loan calculator before, these tips will help you make the most out of this tool.

1. Consider the Length and Total of the Loan

Two factors are critical when researching loans. First is the length of a loan. The longer you have your car loan, the more you will pay for it, and the auto loan calculator will help you determine this.

For example, if you borrow $16,000 at 7.02% Annual Percentage Rate interest for four years, you will pay $2,397 in interest over the life of the loan. If you borrow the same amount at the same rate but for six years, you will pay $3,651! That is a lot more money to pay for the car.

Second, make sure you look at the loan total. The loan total is the total cost of the loan, including interest and fees, over its lifetime. Under the Truth in Lending Act, your lender must show you a loan total when you apply for a loan.

An auto loan calculator allows you to see the impact of your loan's length on the total cost of your loan. It also lets you quickly calculate loan totals based on the different vehicle starting prices. This means you can get a fair price that fits your budget as you shop for your next vehicle.


Cars parked in a car vending machine

2. Loan Rates Aren't the Only Factor to Consider

As you look at the total amount for loans, you'll see that rates aren't the only factor to consider. Your car loan rates are important, as they represent the biggest expense of your loan, but you'll also need to consider the lender's fees, like origination fees, as well as the tax, title, and license fees for the vehicle. These can vary from one vehicle or lender to the next, and you'll want to know them as you calculate the costs of your vehicle purchase.


3. Shop Around for the Best Car and Best Car Loan for You

Once you've found an auto loan calculator that works for your needs, it's time to start shopping for loans. Your local credit union can help you compare loan options with different terms, down payments, rebates and more.

Once you have those quotes, plug them into the calculator. You’ll be able to see the monthly payment and total cost of the loan, including both the interest rate and fees. This will help you select the best car loan for your needs.

You can do the same thing as you search for cars. Once you know the loan terms, including the interest rate and fees, you can plug different car prices into the calculator. This will help you determine exactly how much you can afford to spend on your vehicle purchase.

Quick Tip!

Often times your credit union will also be able to help you find your dream car through a vehicle buying service. At Peach State we work with Auto Assistance. They can help you every step of the way, from finding a vehicle that suits your needs to delivering the vehicle right to your door. They’ll even check the vehicle history report and make sure you get the best deal available!


Two people sitting in the back of a car watching the sunset over a field


4. Remember Other Add-on Costs When Using an Auto Loan Calculator

When you use an auto loan calculator, make sure you calculate all of the fees you may have with the car. Some of these come from the dealer in the form of add-ons. Extended warranties, paint and fabric protection, maintenance programs, and anti-theft window etching may be options or requirements from your dealership, and these will increase the cost of your vehicle. Find out what add-ons the vehicle has available, and determine the ones you want, then add that into the cost of the vehicle on the auto loan calculator. This will give you the best possible idea of the total cost of your vehicle and your car loan. If possible, opt not to purchase those add-ons, especially if the purchase must be rolled into your loan. 

In addition, you will need to consider annual costs for owning your vehicle. Car insurance and license registration fees are some examples. If your car loan calculator does not have a field for these types of add-on costs, remember to consider them in your budget as you shop for a car.

Shopping for a car and a car loan takes time and patience, but the potential savings make that investment worthwhile. Using an auto loan calculator, can help you determine the price you can afford.

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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