Car Finance Calculator

How does this car finance calculator work?

This tool takes account of the amount needed to finance your car buy, a desired term to payoff in years OR months, and an annual interest rate together with the repayment start date. By its algorithm it displays the following details:

- Monthly payment which will be the amount of money that the debtor have to pay on a regular basis;

- Total number of fixed payments within the agreed term;

- Total interest paid which is the total cost of the money borrowed;

- Total amount paid represents the total of money paid consisting in the principal plus the interest;

- Pay-off date represents the estimated calendar date of the last payment;

- An amortization schedule with a detailed presentation of the payments to be made.

Please note that this car finance calculator does not take account of the acquisition fees, destination charges and any other fees or incentives. It is only a fixed-interest loan application designated to simulate car monthly payments and total to be paid. In case you want to take account of any acquisition associated costs and fees you can add them to the price of the automobile or to the amount to be borrowed.

What is car finance?

Car finance refers to different financial products, tools or resources which allow a person to acquire a car within certain conditions agreed by the parties of the arrangement. Please note that the term do not cover the situation in which the vehicle is brought by a onetime cash payment.

How to finance a car buy? 

In the event that you don't have enough cash to buy an auto by a single lump payment, there are few options to make such a purchase:

• One way is by a personal loan also which in many cases prove to be a good choice in comparison to paying by a hire purchase contract. Another advantage it has is that in case you can’t afford to pay your loan at a certain point, you can sell your car and payout the remaining balance. One important disadvantage of this type of loan is that it has a lower limit of amount that can be borrowed compared to other options. This means there are cases in which the buyer can’t borrow all the needed.

• Another method is by a hire purchase plan which usually require you to have cash or funds for an upfront deposit and then pay a certain number of monthly instalments. Once all the payments are made the car (you can drive from the moment you sign the agreement) is in your property. Needless to say that in case you don’t make your payments the creditor has the right to repossess your car by a certain legal procedure. Please note that you cannot sell the car until the last instalment was paid. Also when trying to close the agreement before the set time you will most probably have to pay some penalties.

• One unconventional method designated for persons with capacity to payout in a very short term is by using an offer of 0% interest on credit card. This option may be used in case of cheaper cars or in case of second hand autos. Its main disadvantage is that the 0% interest on credit card is usually applicable for very short time periods which means you should have the capacity to finance your negative balance quickly, otherwise you have to pay extremely high interest rates.

• The fourth way is by a lease contract which is a long-term rental agreement that requires you to pay a monthly fee to use the car for an agreed period, and then at the end of the contract you have the option to buy it at a residual value agreed between the two parties. Usually the monthly lease payments are smaller than in case of an auto loan. This is due to the fact that the lease payments are established from the value obtained by subtracting the residual value from the car market value. In order to perform a quick comparison between an auto loan and a lease agreement you can use our lease calculator.