ArticlesBase.com - Free Articles Directory
Free Online Articles Directory
07.10.2008 Sign In Register Hello Guest
Email:
Password:
Remember Me 
forgot your password?


Car Loan Calculation Basics and the Three Factors Affecting Your Loan

Author: Sawyer Theron Author Ranking Blue | Posted: 28-04-2006 | Comments: 0 | Views: 135 | Rating:  (52) Article Popularity - Blue (?) Got a Question? Ask.
Sign Up Now!

Borrowing money to purchase a new car can be estimated using a car loan calculation. It is important to estimate the monthly payments that you will ultimately be responsible for when paying back the car loan.

There are three basic factors to think about when shopping for a new loan and are used in the car loan calculation: interest rate, loan principal and loan period. Knowing these three items will enable you to understand how much loan you are able to obtain. Using these to make your loan calculation will help you establish your budget for making the monthly payments.

Finding out the answers to these three questions is as simple as asking your loan officer or going online. Most online lenders have a simple car loan calculator you can access from their web site that will help you determine how much loan you can afford. You can also call lenders and ask them what their lending rates are based on how much you are borrowing and how long you will take out the loan.

Remember that most lenders will want you take out as much loan as you can possibly afford since they will make more money the larger the loan is that you receive. These car loan calculations can give you an estimate of the total costs which you can use to compare against your total income. This will help you determine how much loan you can afford.

To understand the loan process fully, you need to learn and understand what the loan terms refer to. This will help keep your budget on track as you are calculating your loan.

Car Loan Calculation: The Loan Principal

In car loan calculation, the loan principal is the amount of money you originally borrowed. Loan principal is a term used in finance that refers to the original amount of the dept or the original amount of money borrowed. Your total interest charges at the end of the loan period depend on the amount of the loan principal and the loan period. The more principal you borrow the more money you will ultimately be paying back over the course of the loan.

In some cases, the loan principal is used to refer to the amount of money left or still owed after the debt has been partially paid. In this case, the loan principal is sometimes referred to as the remaining loan principal or outstanding balance. With each monthly payment, you slowly but steadily chip away at the total loan principal until the balance is paid off.

In car loan calculation, it is important to know that a good percentage of your monthly payments in the first few months are used to cover the interest costs. Only a small percentage is used to pay off the loan principle. This is most commonly seen in amortization loans. As the loan matures more of your payments will go towards paying down the principal and less to pay the interest of the loan. This process continues until the remaining principal balance is paid off.

Car Loan Calculation: Interest Rate

The interest rate is usually expressed in percentage and is referred to as the amount of money charged outside the loan principal amount. The lower the interest rate the lower your monthly payments.

Car Loan Calculation: Loan Period

The loan period refers to the life cycle of the loan, the length of time the borrower agreed to pay back the lender. The longer the loan the more expensive the loan will be.

Car loan calculation is an important part of purchasing a car loan. You can determine how much your loan is going to cost you by utilizing good car loan calculation.

Rate this Article: Current: 0 / 5 stars - 0 vote(s).

Article Tags: Car Loan

Article Source: http://www.articlesbase.com/finance-articles/car-loan-calculation-basics-and-the-three-factors-affecting-your-loan-25047.html

Print this Article Print article   Email to a Friend Send to friend   Publish this Article on your Website Publish this Article   Send Author Feedback Author feedback  
About the Author:

Sawyer is a featured writer for The Bloglands network of sites. Visit Car Loan Guide for more information on car loans.

Submitting articles has become one of the most popular means of generating quality backlinks and targeted traffic to your website. Join us today - It's Free!

Article Comments

Comment on this article Comment on this article
Your Name
Your Email:
Comment Body
Enter Validation Code: Captcha


Related Articles

Buying a Used Car
By: Joseph Kenny | 08/11/2005 | Finance
Free Finance articles for use on your Finance related website. Find articles of the subject of Finance

How To Save Money On Your Car Loan
By: David Neehly | 22/05/2006 | Finance
Free Finance articles for use on your Finance related website. Find articles of the subject of Finance

Sail Out of Bad Credit History and Fulfill your Dreams With Bad Credit Loan
By: C.carl | 25/10/2006 | Loans

Tips to Avoid Debt Trap
By: Stephen Thomson | 29/01/2007 | Loans

UK Loans: Choose your Priority
By: Adam Jaylin | 07/02/2007 | Loans

Test Driving A Used Car
By: Kevin Lloyd | 20/02/2007 | Automotive
Car Articles, Vehicles, Auto's Articles all related to the automobile world.

Car Buying Vs Car Leasing
By: Sean Patrick | 27/03/2007 | Finance
Free Finance articles for use on your Finance related website. Find articles of the subject of Finance

Drive Home a Car Smoothly Through Used Car Auto Loans
By: Gary Grobowski | 09/06/2007 | Loans

Got a Question? Ask.

Ask the community a question about this article:

Frequently Asked Questions

Unsecured Credit Card Debt
By: TM | 22-08-2008
I live in Oklahoma. My question is about unsecured credit card debt.Can the credit card companies put a lien on my home for non-payment of the debt? I have a Homestead Exemption filed.Also, can my wages be garnished for these unsecured debts? Thanks, TM

Domesticating a Default Judgment in FL and Car Lien from Creditor
By: Sharonzzzzz | 03-08-2008
I have a default judgemnt and the attorney for the creditor (Cach LLC) said he is going to domesticate the default judgment in Florida and then put a lien on our house and cars. The default judgment is in my name only (not my husbands). First...can you domesticate a default in Florida? I've heard you can't. Second...can they put a lien on my husbands car? The title says both our names with OR (not AND). They are both paid off in full.  Third...if they do put a lien on the cars, can they then come and get them or do they have to wait until we try to sell them. Thank you.

Car Loan
By: Manuela | 24-06-2008
Can I just pay the interest on my car loan till I get back to work in September?

If you have a car that is being paid off but still ...
By: moe | 16-06-2008
If you have a car that is being paid off but still owe on credit cards and another car loan can a lean be put on the care that is paid off????? My brother lost his job and has gone into default on everything except this car because i have been paying for it for the past 3 years

Credit score
By: jill barber | 29-05-2008
What is considered an excellent credit score? 

How To Sell A Car Loan
By: Patricia | 23-05-2008
Before we met, my husband agreed to help a girlfriend purchase a car. The car and the loan are in his name.  There is almost three years left on the loan.  He doesn't have any need to get the car back from her, but would like to be freed from the loan.  What is the best way to acomplish this?

Q&A Powered by:
Powered by Yedda 

Latest Finance Articles

Understanding Debt Consolidation Loans
By: Richard Greenwood | 07/10/2008
It can be all too easy to end up in debt and especially during the current times of financial uncertainty you may find yourself unable to make repayments. Consolidating your debt can make your debts easier to manage and lower your interest charges meaning you become debt free faster.

Credit Card Comparison
By: Richard Greenwood | 07/10/2008
Credit card offers are everywhere and all claim to out do each other. How do you cut through the marketing talk and understand the key features you need to compare to make an informed decision. Find out with this informative article on credit card comparison.

Shopping For Auto Insurance
By: Brenda Williams | 07/10/2008
When you get your license for the first time before you begin driving you need to get car insurance as it's mandatory to have car insurance while driving. Car insurance can be rather expensive, especially for new drivers which is why you'll need to ensure that you're getting the best...

Taking 100% Responsibility - the Prerequisite for Creating Money & Marriage Success
By: Leslie Cunningham | 07/10/2008
It's a simple concept, to refrain from blaming and complaining, and yet it's a challenge to change a habit, especially one that everyone else has. Like sticking to your diet, when everyone else around you is enjoying chocolate cake. Keep reading and you'll find out how this relates to your marriage and finances. Then I'll share some action steps to help you become 100% responsible for your life.

Retirement Income Investing and Your Portfolio
By: Steve Selengut | 07/10/2008
Brokerage firm monthly statements are designed to promote either fear or greed, depending on the current market environment. Nowhere on your statement can you find numbers that report your net investment, your total working capital, or your true asset allocation. Current and projected income numbers are given little attention

Buy to Let Investors Get a Boost
By: Parmdeep Vadesha | 06/10/2008
Buy to let UK investors are in a prime position to take advantage of a new government plan to spur property market activity. The scheme aims to permit property buyers to buy properties worth up to

How to Buy a Repossessed Property for Below Market Value
By: Parmdeep Vadesha | 06/10/2008
Buying a repossessed property is what matters for investors who are keen on reaping high profits. But even with the advantages it poses, there are certain aspects you need to be aware of before you start on the task of acquiring your next property cheaply.

Brits Should Ensure They Have the Cheapest Energy Supplier
By: Abbi Rouse | 06/10/2008
With energy prices escalating steadily, consumers could knock considerable amounts off their utility bills by switching from their areas default supplier.

More from Sawyer Theron

So You Want to Learn to Knit?
By: Sawyer Theron | 24/04/2006 | Home Business
Knitting is fast becoming popular hobby again. The techniques for knitting are easy and fun to learn. You can learn the basic stiches then be on your way to creating interesting projects.

Article Categories






Give Feedback

Sign up for our email newsletter

Receive updates, enter your email below