How to Use an Online Payment Calculator to Your Advantage

May 13th, 2022 by

Like many people, you may find that buying a car is a stressful process. However, online payment calculators, like the one on the Miami Car Credit website, can make the process easier. These tools give you the power to estimate your monthly payments on a new or used car. Keep reading for some helpful strategies you can use to get the most out of an online payment calculator.

Understand the Calculator Fields

Photo of a Manual Calculator on Top of Money

Calculator” licensed under “CC By-SA 2.0” by 401(K) 2012

Understanding the information that goes into a payment calculator can help you optimize your loan, which can save you money and get your car paid off sooner. Here are some common fields for online payment calculators:

Vehicle Price

Online calculators have a space for you to enter the vehicle’s listed price. This price may not include licensing, title, or tag fees, but it’s a good starting point for your calculations.

Interest Rate

A loan’s interest rate is the amount of money per dollar that you pay to the loan agency. Your interest rate may depend on the loan amount, your down payment, and your credit score, according to Nerdwallet, but 4.9% is a good rate to use in an estimate.

Loan Term

The loan term is how long you’ll need to make monthly payments on the car before you’ve paid the loan in full. Common loan terms include 60, 72, and 84 months.

Down Payment

The down payment for a car is the amount of money you have available to start your payment. A larger down payment could mean lower monthly payments or a shorter loan term.

Trade-In Value

If you currently have a car, you can often trade the car to the dealership for a discount on your new car purchase. Some dealerships, like Miami Car Credit, offer instant cash for cars based on their year, model, and mileage.

Use Accurate Trade-In Information

You can estimate the value of your trade-in vehicle when you use an online payment calculator, but getting your trade-in value from a dealership means you’ll have accurate information to put into the calculator. The trade-in value can affect the total amount you need to finance a loan. You can add that amount to your down payment to lower your monthly payments or decrease your loan term.

Lots of factors can affect a car’s trade-in value, including the model, year, and mileage. You can use the following guide to help you estimate your car’s trade-in value. This tool gives you access to the same information an expert will use to appraise your car’s value. If you’re looking for a fast cash option, the Kelley Blue Book Instant Cash Offer can help you get money for your trade-in vehicle instantly.

Adjust Loan Length To Reduce Cost

Longer loan terms have higher financing costs, even though they have lower monthly payments. This means that when you choose a longer loan length, like 84 months, you pay more than you would for a 72-month loan. The difference in monthly payments between an 84-month and 72-month loan might be less than a fancy dinner out, depending on the cost of the car and your down payment. Consider trimming your budget in other areas, so you can pay a slightly higher monthly payment on your car, avoid higher finance charges, and get it paid off sooner.

For example, if you bought a car that cost $15,000 with a $2,000 down payment, you’d finance $13,000 of that cost. For an 84-month loan term at 4.9%, you might pay $183 per month, so at the end of your loan, you would have paid $15,372. If you shortened the loan term to 72 months, you’d pay $209 per month, just $26 more, but you’d save over $300 on your car. Plus, you’d have your car paid off a year earlier, which lets you save for your next big purchase, like a house or vacation.

Think About Associated Costs

While an online payment calculator may include all the information you need to buy a car, it might not take the cost of owning the car into account. When you purchase a car, you’re responsible for the tag, title, and licensing fee, even if the dealership handles the transfer process for you. Typically, the dealership representative gives you information about those additional fees during the car purchase process. If you choose to add any warranties, protection plans, or gap insurance to the car, those additional fees might add to your financed amount.

It’s also important to think about your monthly car costs when deciding on a loan term. Along with your car payment, you’ll pay insurance on the car and additional drivers. You might also pay gas money and maintenance costs for oil changes and tire rotations. Consider making a budget for your car costs based on past months. Knowing how much money you might spend on maintaining the car can help you choose a payment amount that fits within your budget.

Consider a Future Payoff

You may think that your only two car-buying options are to buy a car with cash or commit to a long loan. However, loan payoff options let you have the best of both worlds. If you don’t have the funds to buy a car with cash right now, you can finance your purchase and start making monthly payments. Then, if your financial situation changes, you can request a payoff quote from your lender.

Typically, payoff quotes include any interest until the day you pay the loan off, along with the balance on the loan itself. If you’re planning to go the payoff route, pick a loan plan that lets you make your monthly payments easily. Then, put aside money every month in a payoff fund or add extra money to your monthly car payment.

Contact Miami Car Credit for Help Purchasing a Used Car

Here at Miami Car Credit, we’re dedicated to getting you the perfect car for your budget. Contact us today to find out about our inventory of quality used vehicles. You can also reach out to our finance center if you have questions about our special offers or have additional questions about how to best use our online payment calculator.