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May 12

Understand the Advantages and Types of Car Finance Calculator

Not everybody is savvy when it comes to calculating finances or understanding the various financial products. That can become a problem when you are about to make a capital purchase like a new car. After all, in these tough economic times, it is vital to save every dollar and ensure that you do not end up paying more than you have to just because you were lax in your understanding of a particular loan product.

This is where the use of a car finance calculator comes in handy. This tool helps you to determine the amount that you can allocate towards the purchase of your new car. You will be able to save time and effort and get an accurate figure of your monthly commitment. The car finance calculator can also enable you to do the following:

a) Determine the depreciation cost of the vehicle you want to purchase.

b) Help you make up your mind as to whether you will be better off buying the vehicle, or just leasing it.

c) Decide the term of finance that would be best, given your budget.

d) Enable you to decide if you need to take car finance or use your home equity to finance the purchase.

So what is the information you need to feed into the software for you to get the above answers?

1) You first need to input the margin amount you can spare.

2) The value of your old car, if you have one.

3) The rate of interest charged by the lender.

4) The duration, as well as other expenses such as insurance, processing, handling and so on.

5) Your monthly income.

The above will help the car finance calculator to come out with the monthly payment you’ll have to make towards your car finance. These tools are available at finance sites and you only need to change any of the above specific values to get the corresponding monthly figure you will have to pay.

Using a car finance calculator, you will be able to compare the different offers of lenders and decide on the one that best suits your requirement. The calculator will also tell you the penalty you will have to fork out should you miss out on a monthly payment. This knowledge will stand you in good stead when you are negotiating with lenders and you will be able to get the best offer from them.

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