What You Should Know about Car Finance Calculators

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January 27, 2012

Car finance calculators make it possible for you to get an idea as to the amount you could pay each month for a particular car. The finance calculators are very easy to use, if you have accurate information.

Calculators Only Provide Estimates
It is important to remember that the numbers you get from the car finance calculators are estimates of potential monthly payments and not offers. Because they are dependent on the accuracy of the information you enter, they may be different than what a dealership will really offer you. The best use for these calculators is in helping you compare cars. The calculators can quickly help you to get an idea as to how much per month the each car could potentially cost you. While the results may not be entirely accurate, you will receive a brief summary which can help you decide which car best suits your financial situation.

Do Your Homework First
Since the calculators depend on your input of information about the loan, the price of the vehicle, the trade in value of your car, and the interest rate and the length of the loan, you must know each of these items in order to get the most accurate results. Start by retrieving the price of the vehicle you wish to purchase. Next, look up the trade-in value of your car and use a conservative estimate when you use the calculator. Then, call several banks or financial institutions to find out current interest rates. Overall, finding the most accurate information to enter into the calculators will return the most relevant results for your situation.

How to Get the Best Auto Financing Deals

Auto financing deals can be found during certain times of the month, and of the year. There are conditions that can help you to make the best deal on top of what a dealership may initially offer. With a little ammunition you can keep the costs of your new automobile purchase affordable.

Assess Your Credit
Before you step into the showroom, ensure that your personal finances are in good order. Have information about your income, your expenses and whether you are a home owner or not. Even the region you live in will give you a better chance of finding a deal. The auto dealership will be pulling up your credit report to check to see if you are a good risk, so it is better if you already know what you are working with.

Shop in the Best Times of Year
Thanksgiving to New Years is a great time to make a deal on a car. Dealerships understand that there are higher priorities than purchasing a car during the holidays and they offer deals to keep business going in this slow period. In addition to the winter holidays is tax time. If there is inventory sitting on a lot the dealership has to pay taxes on those vehicles. They would rather take a cut on the sale of a car than pay taxes on it. The new models of cars come out between July and August. This is a good time to purchase a new car of the previous year. If it is August 2012, you can buy a 2012 brand new car for a deal because the dealership is trying to make room for the 2013 cars.

Consider Fleet Vehicles
Many times you can purchase a fleet vehicle for a large cut over the price of a regular show room or floor model of vehicle. Fleet purchased vehicles are the same cars as the regular priced cars but they were purchased for a business and the purchase was not completed as anticipated by the dealership, so they are working to rid their inventory of the overage.

Bring a Negotiator
If you bring an impartial person, someone who is not going to be responsible for the car, they can help you with negotiation. It is many times easier to get a third party to talk the seller down on the price of the car. Much of the purchase price of any automobile is commission, and an enthusiastic car salesman will be willing to deal.

Talk Directly to the Manager
Eliminating the middleman is good method of getting your cost down. Stick to your guns, know how much you are willing to pay, tell the salesman and manager that you will only spend a finite amount of time, and you will not be playing the price negotiation game. If the dealership knows that you are firm in your convictions they will spend less time wasting your time, and work with you to get you to drive off with your new car.

Consider Low APR vs. Cash Back
Two incentives that lenders offer are low APR or cash back incentives. APR or annual percentage rate, is a simple interest annualized rate of the stated rate which is the loan's coupon rate. The APR is typically higher than the stated rate for the loan. Dropping this by a few points may be significant over a longer period. You may also find that the cash back offer results in an overall lower loan cost. You can understand which offer is best for you by requesting a simple side-by-side comparison of the two offers be done.

Learn Where Your Loan Originates
It is important to know where your loan originates, and whether or not it can be sold to another lender without your knowledge. One of the problems that occurred in the real estate mortgage market with sub-prime loans was the packaging of loans by a lender to be sold to a distant third party. This packaging and repackaging took place many times, obscuring the identity of the origination source.

Avoid Buying Extra Warranties
Warranties are another area that relate to your bottom line costs. A standard warranty should cover a period up to 50,000 or 100,000 miles and provide basic coverage for the engine, transmission and drive train. Some may even go so far as to provide free checkups and oil changes for the life of vehicle. Purchasing additional protection only increases your total loan cost and does not necessarily provide more protection for your vehicle.


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