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How to Use a Car Loan Repayment Calculator to Get the Best Deal

How to Use a Car Loan Repayment Calculator to Get the Best Deal

Looking for car finance?

Most of us need a car to get around in today’s busy world, but not all of us can afford to pay the price upfront.  If you’re looking for car finance then a car loan repayment calculator can be a super handy tool to help you on your journey. 

At Pocket Cash we can help you find lenders online offering car loans worth up to $30,000. Of course, it’s always worth knowing what you can afford before you apply for finance.

In this article, we’ll run you through everything you need to know about repayment calculators. So, keep reading to get insights into how you could get a good deal on your car loan!

What you should know before using a car loan repayment calculator

Before applying for a car loan or using a repayment calculator, there are a few things you’ll need to keep in mind. Specifically, you’ll want to think about your credit score, how much you wish to borrow, interest rates, and more. Let’s take a quick look at some of the key factors:

Credit score

Your credit score is one of the most important parameters that lenders will look at when assessing your application. Although it’s just one number, it could be the very thing that stands in the way of you getting a car loan.

Basically, a credit score is a number that reflects your creditworthiness. It can range from 0 to 1,200, depending on the credit reporting agency. The lower your number, the worse your ranking. To get approved for a car loan, most lenders will need you to have a higher credit score. So, you should ensure your credit score is in good shape before you even use a car loan repayment calculator.

You can learn more about credit scores and how they work by referring to ASIC’s helpful guide on MoneySmart.

Car loan amount

How much you borrow doesn’t have to reflect the exact price of the vehicle you wish to buy. Most banks, lenders and dealers can finance a percentage of the car loan. It’s important you consider your current income and savings before settling on a loan amount. The last thing you want to do is take on more debt than you need to – or can afford. 

Car loan interest rates

There are a wide variety of lenders out there offering car loans and interest rates will vary greatly between them. One thing you’ll want to consider when weighing up the pros and cons of a lender is interest. A good interest rate can mean lower repayments and a better deal over all. Interest rates can be dependent on the car model, loan amount, and the repayment term. 

Car loan repayment term 

When applying for a car loan, the repayment term is very important. Longer terms may offer more flexibility, but they can lead to higher interest rates. That means that the overall cost of the loan may be far greater than the amount you initially borrowed. Choosing a shorter term may help in repaying a car loan faster but the repayments will be higher. 

Processing fees

You can always use a car loan repayment calculator to get an idea of costs. However, you’ll want to be wary of additional fees. Many lenders will charge processing fees once they approve you for a loan. Before signing a loan agreement, you should always make sure you’re fully aware of any additional charges they may have.

How does a car loan repayment calculator work?

A typical car loan calculator takes three basic parameters into account:

1. Interest rate

An interest rate is a portion of the loan charged to the borrower, usually as an annual percentage of the loan outstanding. When you take out a car loan, you will need to repay the amount you borrowed plus the interest charged. For car loans, interest rates tend to sit between 5% and 10% for secured loans, and up to 15% for unsecured loans.

2. Loan amount

Car loans can range from $5,000 to $30,000+ depending on the lender. You can use a car loan to pay off the entire cost of the car or borrow an amount to help you purchase the vehicle upfront. Ultimately, the appropriate loan amount for you will depend on how much you wish to pay and what you can afford.

3. Term

The loan term will play a big role in the cost of your loan. An ideal thing to remember is that the shorter the repayment term of the car loan, the higher the monthly installments to be paid, and vice-versa. However, the longer the term, the more interest one has to pay. 

Most lenders will provide car loans with a maximum term of 7 years. 

Advantages of using a car loan repayment calculator

Accurate figures

One of the most essential benefits of using an online calculator is that it provides accurate results through computerised analytics. This means you’re far less likely to have any errors in the calculations. 

Free comparative data

An online calculator is usually free of cost, that means, you can do as many calculations as you want in order to compare the interest rates offered by the lenders. 

Instant results

A car loan repayment calculator can offer results in no time! All that you have to do is to insert the numerical values, click calculate, and it’s done.

Budget identifier

Some car loan calculators can also help you identify your budget capacity based on your income. This can save you a lot of grief when it comes to figuring out the right loan amount for you. 

Where can I find a trustworthy car loan repayment calculator?

Anyone interested in getting a car loan can use a car loan repayment calculator to get an estimate of the cost. Since a car loan is a type of personal finance, most personal loan calculators will also work when it comes to working out your repayments. You can find a range of calculators online, with many lenders even offering their own repayment calculators. 

A good place to start is MoneySmart’s personal loan calculator.

Get help finding a car loan today!

If you’re on the hunt for car finance, it can be difficult to know which lender is right for you. At Pocket Cash we work with a wide range of lenders offering car loans up to $30,000. When you apply with us, we’ll search the web for the lender most likely to offer you the car finance you need. So, even if you have bad credit – we may be able to help.

It’s free to apply so scroll up now to get started!

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