Calculating a car loan helps you pay less

Do you want to know how much a car loan will cost you before hiring it but you manage with the numbers? On this page, you will find a tool with which you can calculate the price of a car loan to compare the result with other offers in the market. In this way, you will know that you are making the best decision for a Fast & Easy car loan. 

Things to look for when calculating car loans

When we look for financing, there are a number of factors that will influence the cost of a car loan. Therefore, we must take into account some characteristics of the products before hiring the final product. Below, we show five aspects that will affect the final installment of a car loan:

The loan capital

It will be the total amount of money we need to acquire a vehicle. The higher it is, the higher the final price that we will pay since interest is generated on a larger capital. For this reason, it is advisable to request only the amount that we will need. If we have some money saved, that we will not pay in interest later. Therefore, the less money we request, the cheaper it will be for us.

The term of reimbursement

The amortization period of the loans is the aspect that most expensive a loan. If the term we have chosen is very long, even if the quota is more acceptable, interest is generated for a longer period of time. Therefore, we will have paid more for the same amount. It is advisable to choose monthly installments that are easy to assume according to our financial capacity but that are extended as little as possible over time. For this, the best thing is to raise the amount of the quota to the maximum that we can pay without leading to any problem. The sooner we get rid of debts, the less we pay in interest.

The interest rate

Another aspect that we must also take into account is the cost that the lender will apply to us and that will affect the price of a car loan. In addition, this factor also determines the amount to which each monthly payment will go up. To avoid paying more, it is advisable that we ask about this percentage when requesting information to compare it with the one offered by other lenders. The interest rate that will allow us to better compare is the APR because it is the indicator that will allow us to calculate the car loan more accurately.

Credit Fees

There are products on the market that have some study, opening or early repayment commissions under their conditions. Therefore, we will not only have to add the cost of interest. If we request financing for our car, it is important that we inform ourselves if we are going to pay any penalty for accessing the credit or for reimbursing the money before the term that appears in our contract.

The linked products

When we decide to finance the purchase of our car, some entities or dealers can ask us to hire one or several of their products to get better conditions or even to access the car loan. This is one of the main factors that we must take into account when calculating the car loan, as we can include insurance or services in exchange for reducing interest, but when we do calculations, we see that in the end, we get more expensive. Therefore, it is advisable that we calculate if we are going to pay less than opting for another product without linkage.

Notary fees

Some lenders can ask us, depending on the amount we need, the intervention of a notary. We are going to assume an additional payment regardless of the contract conditions we are going to sign. Therefore, it is advisable to assess if it is worthwhile to assume this expense.

What do I do after calculating a car loan?

The conditions and characteristics of our car loan will vary greatly according to our profile. So the data that has come out of our calculations may vary a bit. In most cases, the types of interests published, for example, start from a percentage that can be higher later. Once we apply for the loan, in the file with the standardized European credit information we can see all the features and total costs, as we have said, this does not have to coincide with the previously calculated one.

If the financial institution accepts our request, it is also advisable that we ask you to make a binding offer to be able to compare the conditions of the car loan with those of other products on the market. This binding offer cannot be changed for a certain time, which gives us the opportunity to value other options for loans or financing and buy the car at the cheapest price.

We show you how the term affects when financing a car

When calculating how much it will cost us to finance the car, we have seen that there are many factors that influence and can cause the price to vary. However, one of the most important to take into account is the term, that is, the time we will be paying for such financing. In the following image we can see a table in which for the same amount and the same price (interest), the cost that we will pay is very different according to the chosen term: 

Therefore, as we can see, having a longer repayment term means that the monthly payment to pay is smaller, which may be more comfortable for our family economy. However, at the end of the loan for the car, the calculations leave no doubt: we are going to pay much more in interest. Therefore, it is always advisable to adjust the quota as much as possible to what we can pay per month, in order to reduce the term to the maximum and not pay more than we should in interest. In web pages we can find the car loan simulator of credit institutions we can check these calculations for ourselves.