How do I calculate my car payment? – Car Payment Calculator
People are often worried about the car buying process partly because they are unsure how much they should expect to pay monthly. If you finance, your payment is is a function of 3 things: (1) the amount you borrow, (2) how long you borrow it; and (3) how much interest you agree to pay.
Assuming you borrow $10,000 at 7% for 60 months you will have a payment of approximately $200 a month. Put another way, you are paying $20 for every $1,000. So if you were borrowing $20,000 at 7% for 60 months your payment would be twice as much or $400 per month.
More experienced shoppers will recognize this example and put it in terms of a factor - .020. So if you multiply the amount of money you are borrowing by .020 it will give you your payment (assuming 60 months and 7% interest).
So before you go shopping for a vehicle - figure out what the monthly payment should be by clicking here on a finance calculator.
Now if you have credit issues, typically your payment will be $250 for $10,000 borrowed or $25 for every $1,000; or a factor of .025.
What if you lease? Well similar rules of thumb can apply. A lease is typically $150 per month for every $10,000 worth of vehicle. So if you are looking at a $20,000 vehicle and leasing for 36 months with no money down, you should have a lease payment of $300 (plus sales tax and registration fees). Put in terms of a factor - a lease is a .015.
Use the calculator and find your payment so that you don't have to worry.
Great post. I will read your posts frequently. Added you to the RSS reader.
21/06/2008
Question from consumer:
What action would you recommed a consumer do if they have purchased a vehicle in 2002 that has a depreciating value that is presently valued about $6000 less than the retail value of the car today?
14/01/2010