Many people can’t afford to buy a new, and they always the option of leasing or car financing. The type of car financing you choose depends on the kind of car you value. If you love a car with comfort, then owing the latest model should be on your priority list. When you are searching for car financing, the first things you should consider how much you earn and the type of car you want to buy.
If you want to buy a new car, the car dealer will request you to fill in a credit application form based on your credit score. Car financing can also be arranged through a dealer. Car financing normally come in 36-60 months of repayment options. The longer you pay for your car finance, the more you will pay in terms of interest. The total amount you should repay depends on your down payment, interest rate, and the total sum of the car loan. Ensure that you are careful since the dealer will always recommend you to make large down payments. Car financing is based on the fact that until you pay your last installment, then the lending institution owns the car. You will get the car payment documents after you have made all your payments.
The formula for calculating a car payment
After applying for a loan, you need to know how you will repay your loan. You need to see if you will afford the monthly installments. If you are looking for the formula for calculating a car payment, then the following are ways you can calculate your car repayment options.
Know the total cost of the vehicle, your down payment and the interest rate you will paying
After you find the above, you need to prepare your calculator based on the following four assumptions:
The total sale price of the car.How much money can you pay as a down payment?Expected interest rate “r.”The period you will be paying down the loan “m.”
Subtract your down payment from the total price of the car to determine the amount you have borrowed. Name the amount you have borrowed “p” (principal).
How to calculate car payment
Use the following formula to determine the amount you should pay
P (r / 12) / (1 – (1 + r / 12) – m)
For example; Let
P= $12,00
m=46 months
r-= 0.008
To calculate your car payment:
12000 (0.08 / 12) / (1 – (1 + 0.08 / 12) – 48)
= $292.96.
