How to Properly Calculate Your Vehicle's Loan Value

January 27, 2012

You should calculate your car's loan value before you go out to get a loan on your car. You can know your vehicle's loan value by checking the average price of the car, or by asking the dealership. To properly evaluate your car's loan, you have to calculate these things.

Step One - Vehicle's Sales Price

The car's sale price will mostly affect the loan. You can ask the dealership for the car's market value, or you can go to edmunds.com and visit their True Market Value site, which has the market value for all models.

Step Two - Sales Tax and Title Registration

The sales tax and the title registration fee also affects your car loan value. Depending on which state you live, you may have to pay different taxes for your car. The state with the lowest tax fees are Oregon and Virginia, while the state with the highest tax fees is Nevada.

Step Three - Cash Rebates

The cash rebates associated with the car also affects the loan price, because it will shorten your loan. Because the car market is greatly competitive, dealerships offer cash rebates so they can clear their inventory. Try to choose a car that is popular, because dealerships will try to sell them quickly; so they would have rebates associated with the sales price.

Step Four - Down Payment

The down payment will shorten the loan value. You should always pay twenty percent of the car's value as down payment, because that will greatly shorten the monthly installments. Also, a down payment will protect you against depreciation. Without a down payment, you would pay more for your loan than how much your car is actually worth.

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