How to Calculate Monthly Car Payments for Your Budget

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January 27, 2012

Before you sign any loan agreements, it would be wise to calculate monthly car payments for your budget. Here are some ways to do just that.

Step 1 - Know Down Payment

One of the ways to help you with your monthly car payment is to put some money down on the total cost of the car.

Step 2 - Determine Length of Loan

The length of time that you will have your loan will greatly affect how much you pay on your monthly installments.

Step 3 - Find Interest Rate

As you are looking for car loans for your new vehicle, they will be able to tell you what the interest rate is that you will be paying.

Step 4 - Final Price

Now that you have all the numbers at your disposal you can determine what the final price is that you are going to be paying. Take the asking price of the vehicle and subtract the down payment. After you have done that you will need to multiply the interest rate and the amount of time you will have the loan.

Step 5 - Monthly Payments

After you have determined the final cost of your vehicle with the interest rate, you can then find out how much your monthly car payments are going to be. Take the final price and divide it by the number of months that you are going to have the loan. If the final price of the car is going to be $20,000 and you have the loan for 60 months, you will be paying $333 a month.

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