Can You Use a Car Payment Calculator With Insurance to Estimate Your Monthly Payment?

Since most drivers can't afford to pay cash for a new car outright, many turn to a bank or credit union for an auto loan. Before you make the major financial commitment to buy a new or used vehicle, you can use an online tool such as an auto loan calculator to estimate your monthly payment. Using a tool such as this can help you plan your budget more effectively. When you use an auto loan calculator with an insurance payment calculator, you will have a better idea of what you can afford.

How Does an Auto Loan Calculator Work?

An auto loan calculator works by combining various factors about your finances and your new car to estimate your monthly car payment. Generally, most car dealers will have a car payment calculator you can access online when you are browsing the dealership inventory. You may want to consider using more than one monthly car payment calculator to get a better understanding of the loan amount you can afford. The main factors used by a car loan calculator include:

Vehicle Price

The purchase price of the vehicle you intend to buy will set the base of your car loan amount. You can estimate the purchase price of a new car by using the car dealer's MSRP for the vehicle, along with other costs like destination fees or vehicle upgrades. When you are using a car loan calculator, you can also subtract savings such as a cash rebate to estimate the bottom line for your new car purchase price.

Estimating the purchase price of a used car is a bit more complex, but you can generally start by using the dealer's asking price. You can get a better estimate of a used car's value by using an online tool to check the market price of the car, which can also be used to set the vehicle price when you use an auto loan calculator.

Interest Rate

Next, you will need to include the interest rate on your car loan. Car buyers can use their credit score to estimate the APR for a new car or a used car. The interest rate on new cars is typically a little less than the interest rate on used cars. If you have a higher credit score, you can also expect interest rates for auto loans to be lower, whereas lower credit scores typically have higher interest rates.

Loan Term

The loan term is the amount of time you have to pay off the car loan. Auto loans typically have 24-month, 36-month, 48-month, 60-month, 72-month, or 84-month loan terms. When you use a monthly car payment calculator, you may notice that longer loan terms typically have lower monthly payments; however, the trade-off is that longer loans also mean you are paying more in interest, so this may not be the best way to save money. It's best to choose a loan term you feel comfortable committing to.

Down Payment

As a car buyer, you will likely want to have a down payment prepared to cover some of the up-front fees associated with buying a new car. While some auto loans do not require down payments, other loans may require 10% to 20% of the car value to secure the loan. A dealership may have a sponsored auto loan offer for zero down payment, so be sure to ask about deals such as this.

Trade-In Value

Some calculators will also have a section where you can input the trade-in price of your existing car. You can use a trade-in valuation tool to estimate the market price of your trade-in, and then use that figure to estimate how much your trade-in value will reduce the remaining balance on your auto loan. If there is still money owed on your trade-in value, this will reduce your trade-in amount.

What is a Typical Monthly Car Loan Payment?

The average auto loan payment for a brand-new car is around $700, whereas the typical monthly payment for a used car is about $500. Keep in mind that this amount does not cover the cost of your monthly auto insurance or the cost of gas and maintenance. All of these additional costs should be considered when you are comparing car loans, so you can select the auto loan that works best for your budget.

Are There Any Additional Fees?

Along with monthly payments for your auto loan and car insurance, other fees are associated with purchasing a new or used vehicle. Some of these fees include local taxes, registration fees, licensing fees, title fees, and more. Many of these fees are part of your financing contract, which means you will need to pay these fees to secure your auto loan.

If you are trading in your old car, you should also be prepared to pay the estimated sales tax on your vehicle trade-in value. The sales tax for your vehicle can be estimated by your zip code. You can use an auto loan calculator to estimate the sales tax for your trade-in valuation.

How Can You Lower Your Monthly Car Payment?

While an auto loan calculator can help you estimate your monthly car payment, there are several things you can do to reduce your total interest cost and your monthly payments. For example, choosing a shorter loan term for your car means you are paying less interest and more toward the principal balance on your car loan. Other methods to lower your monthly payment include:

Compare Multiple Auto Loan Estimates

You should always shop around to compare different auto loans. Some lenders may favor those who have lower credit scores, while other lenders may work directly with your dealership. When you compare auto loans, you should compare the details such as the loan term, the required down payment, and the interest rate offered by the lender.

Increase Your Down Payment Amount

You can also increase the amount of your down payment to reduce your monthly payment. The larger your down payment is, the less you will have to take out as a car loan. Overall, increasing your down payment amount means you are borrowing less and reducing your monthly car payment, which can also reduce your interest rate and positively impact your credit score since you are borrowing less money.

Clean Up Your Credit Score

You can also lower your car payment by cleaning up your credit score. Your credit score has a direct impact on the interest rate assigned to your vehicle payment, so improving your credit score before taking out a car loan is one of the best strategies you can use. You can improve your credit score to get a better interest rate by reducing some of your consumer debt, paying creditors on time, and paying off other loans.

Increase Your Trade-In Value

Finally, you can also work to increase your trade-in amount. The value of trade-ins increases when the car is in good condition, all necessary repairs have been made, and you are prepared to negotiate the value of your car to get the best-selling price.

Aside from increasing your trade-in value, you may also want to consider buying a cheaper car if you still have an outstanding balance on your current loan. When your existing vehicle has more value than the outstanding balance on the loan, you can use this value to buy a new car. But a significant amount owed on trade-ins means your valuation won't offset the amount of your new car as much as you expect.

What Is the Estimated Monthly Payment for Car Insurance?

The average cost of car insurance each month is about $180, although factors such as your age, driving record, and geographical location can all affect this number. The type of insurance you have can also increase your monthly payments. Full coverage insurance and gap insurance usually cost more than liability insurance alone.

How Can You Have Lower Monthly Payments for Car Insurance?

There are several things you can do to lower the monthly payments for your car insurance. In general, auto insurance is more affordable for drivers who have a clean driving record. But if you're a driver who has been in an accident, you can use the following strategies to reduce your monthly payments.

Increase Deductible

Your deductible is how much you will pay out-of-pocket for repairs before your insurance will cover the rest. If you increase your deductible, you can reduce the expense of your car insurance premium since the insurance company will have to spend less on your vehicle repairs.

Ask About Discounts

One way to get the best deals on your car insurance is to ask about discounts that may apply to you. Some discounts can include low mileage, good credit, long-time customer, defensive driving, and more. Combining your auto insurance with your home insurance can also lower your insurance costs.

Should You Revamp Your Insurance Coverage After Buying a New Car?

When you buy a new car, you will need to update your car insurance policy. At this time, it can be a good idea to take a look at specific policies, so you can be better protected on the road. You may want to consider collision coverage insurance or better liability coverage to make it easier to recover financially after an accident.

What Else Should You Think About Before You Buy a New Car?

Aside from finding ways to reduce your monthly payments with a larger down payment, a better interest rate on your loan, or a reduced sales tax on your trade-in, there are a few other things you may want to consider before you buy a new car.

Should You Buy a New or Used Vehicle?

In general, the sales price of used cars is much less expensive than new cars, which is why many car buyers like to shop for certified pre-owned vehicles instead. If your goal is to purchase a vehicle with the lowest possible monthly car loan payment, then buying a used car may be your best option, especially when you use other strategies to reduce your monthly payments.

Should You Install MOPARĀ® Parts?

Many drivers want to customize their driving experience by installing accessories. However, if you want to preserve the value of your car, then it's best to use genuine accessories such as MOPARĀ®. These parts are crafted for your particular make and model, which means the parts will fit perfectly and perform optimally.

Can the Dealer Body Shop Install Accessories?

Yes. If you have ordered a custom part or accessory for your vehicle, but you are cautious about installing this part by yourself, you can always schedule service at your dealership's body shop or service center. The technicians at the body shop will ensure the accessories are installed correctly, so you won't damage the value of your car.

Should You Use Dealer Financing?

You should visit your dealership's financing experts to inquire about ways you can reduce the total loan amount on your car purchase. Cash rebates can be a good strategy for some drivers. A cash rebate from your car dealer may be a great advantage, particularly since some rebates can be used to reduce your total loan or can be used as a lump sum payment to use as part of your down payment.

Before you buy your next car, you should use a car loan calculator to estimate your monthly payment. The largest chunk of your monthly vehicle costs includes your monthly car loan payment and your monthly car insurance bill. By using a car payment calculator, you can estimate these costs and learn how you can get lower monthly payments. To access a car loan calculator, visit your dealership's website or drop by Landmark Dodge Chrysler Jeep Ram at 816-836-0100 today.


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