Q:

How can you use a loan calculator when buying a new vehicle?

A:

Quick Answer

Use a loan calculator when buying a new car to determine the approximate monthly payments, advises Cars.com. A loan calculator allows for a variety of variables that might change or determine the final payment.

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How can you use a loan calculator when buying a new vehicle?
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Full Answer

Entering basic information into a loan calculator allows the buyer to obtain a monthly payment amount. This information includes items such as the price of the vehicle, interest rates, down payments and number of monthly payments. If purchasers need a lower monthly payment, they enter it into the loan calculator and should expect to pay a higher down payment or more monthly payment. The loan calculator allows the buyer to see how these changes affect the monthly payments, according to Cars.com.

The new car buyer plays with the numbers to see how the variables change the monthly payment, Cars.com explains. In some cases, the buyer might change the purchasing location to get a lower sales tax. The calculator lets purchasers see the difference a lower sales tax or interest rate make in monthly payments. After showing the final results, many loan calculators allow the user to link to a graph that includes similar loan types and terms for easy comparison. This tool educates consumers on their options when determining the monthly payment amounts.

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