Car Loan CalculationsPosted by Nick Niesen on October 29th, 2010 Sooner or later, everyone wants or needs to buy a vehicle; and unless you have a money tree in your backyard, you're going to need to take out a loan. Virtually every new car purchase requires financing from a bank or other financial institution. The only other choice is to pay cash, an option few of us have at our disposal. If you're in the market for a new car you'll need financing, and in order to make the right decisions you need to know about car loan calculations. If you fully understand how to make car loan calculations, you'll be able to estimate the values involved in your purchase, as well as balance the expenses that come with buying a new car. Knowing this information is crucial to buying a car that's within your budget. Car loan calculations involve a number of factors. Consider the loan term, interest rate and loan principal and work them into your calculations. Only then will you know if the car you want is the car you're able to afford. Loan Term Interest Rate Loan Principal If your loan is an amortization, you'll find that your first few months of payments will only pay off the interest amount. You can pay $500 a month for 8 or 9 months, only to find that a fraction of that amount has been taken off of the principal. Over time, however, the payments will balance out and you'll begin to see more money coming off of the principal. Eventually, the entire loan will be paid. Buying a car always seems like a great idea, but the payments really can be quite overwhelming. Don't put yourself in a situation where there's more month than money. Car loan calculations are absolutely necessary to putting yourself in the driver's seat, without putting yourself in the hole. Like it? Share it!More by this author |