5 Factors for Using a Credit Union Auto Loan Calculator


Buying a car is an exciting experience, especially if it’s your first. It is often the second biggest purchase you will make after a house. But, as with any major purchase, it’s important to do your homework and understand all the factors involved before signing on the dotted line. A big part of that is understanding the total cost of the car. This is where an auto loan calculator comes in.

A car loan calculator is a simple tool that can give you a good idea of ​​what your monthly payments will be for a given loan amount, interest rate, and loan term. It can also help you compare different loans and find the best one for you.

Read on to understand the following five important factors of using a credit union auto loan calculator.

1. Vehicle cost

The first and most obvious factor is the cost of the vehicle. The price will be the starting point for all your calculations. Do not enter the listed price for the car – use the amount you need to borrow. This is because the displayed price does not always reflect the actual cost of the vehicle. You may be able to negotiate the sticker price down.

If you trade in a car, there may be a discount or you may be eligible for dealer incentives that may lower the price.

2. New or used car

Buying a new car versus a used car will also affect your monthly payments. In general, a new car will cost more than a used car. Cars typically have a 40-50% depreciation rate after five years. However, the interest rate on a used car loan is higher than on a new car loan. The higher fees stem from the lower resale value of a used car.

The type of car you are looking for can also play a role in your decision. Some models hold their value better than others, so a used car can actually cost more than a new one.

So your monthly payment could be higher for a used car, even if the loan amount is lower.

3. Interest rate

The interest rate is one of the main factors in a car loan. The higher the interest rate, the more interest you will pay over the life of the loan. Many factors influence the rate, including your credit score, the type of car you’re buying, and whether you’re financing through a bank or credit union. Credit unions generally have better interest rates than banks.

Having good credit will likely qualify you for a lower interest rate. The same is true if you buy a used car. New cars often come with special finance rates that can be lower than the standard interest rate.

Federal Reserve rates also play a role in auto loan interest rates. When the Fed lowers rates, it’s usually easier to get a lower interest rate on a car loan.

So stay up to date on what’s happening in the economy before you make a purchase.

4. Duration of the loan

The term of the loan is the length of time you have to repay the loan. Loan terms are usually 24 to 84 months, but can be shorter or longer depending on the lender. The longer the term of the loan, the lower your monthly payments will be. However, you will pay more interest over the life of the loan.

The type of car you buy can also affect the length of the loan. New cars often have longer loan terms than used cars.

5. Deposit

A down payment is the amount of money you put down towards the purchase of the car. The larger the down payment, the lower your monthly payments will be. However, you may need to fund a larger loan if you have a smaller down payment.

Try to deposit 20% if you can.

What’s the best way to get a good car loan?

When you’re ready to finance your car, the best way to get a good loan is to shop around. Compare rates and terms from different lenders, including banks, credit unions, and online lenders.

However, the first step begins with your personal financial history. In other words, make sure your credit rating is as high as possible. You can order a free credit report once a year from each of the three major credit reporting agencies: Equifax, Experian and TransUnion. Depending on your bank, your institution, such as Wells Fargo, may provide your FICO score on your profile when you log in.

If you have a high credit score, you’ll likely qualify for a lower interest rate, which can save you money over the life of the loan. A lower credit score won’t necessarily prevent you from getting a loan, but it does mean you’ll pay a higher interest rate.

For example, if you have a low credit score between 300 and 500, you will pay up to 14.59% interest rate. However, a super prime score of 781 to 850 means you’ll only pay 2.34% interest on your car loan.

A loan calculator can prepare you for a car purchase

In conclusion, using an auto loan calculator can save you time and money when buying a car. You need to understand all of the factors that go into a car loan, including the interest rate, loan term, and down payment. It is therefore essential to obtain financing from an institution that understands what first-time buyers are doing.

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