Do the features on an auto loan calculator matter? Online financial tools like auto loan calculators can help you create a budget for your next vehicle and determine what monthly payment you can afford. Almost all lenders have auto loan calculators on their websites. Can you use any of them, or do some auto loan calculators perform better than others?
It’s true that there are some features that the best auto loan calculators incorporate and which are important to look for as you search online. Every calculator will have a place to input the car price and down payment, for example. But additional features can help you get closer to the actual payment you’ll be making. Here are five things that a good auto loan calculator should allow you to input or should provide for you.
Top 5 Features of an Auto Loan Calculator
1. Your Credit Score
The credit score, also called a FICO score, rates your risk as a borrower based on your past payment history, how much debt you have right now, and what available credit you have. Good calculators will have a place where you can input whether your score is excellent (above 780), great (above 660), good (above 600), fair (above 500) or poor (below 500). Inputting that information lets the calculator give you a range of interest rates that you’re likely to pay.
2. Value Estimation Tool
Most calculators have a place where you can put in what your trade-in is worth. If you’re like most people, you aren’t entirely sure about the value of your current car or truck. Having a prominent link to a tool that will help you figure that value is helpful. Most tools will give you a range depending on the condition and mileage of your existing vehicle. Give an honest assessment and, just to be sure, input both the high and low trade-in values when you use the auto loan calculator.
Do you still owe money on your current vehicle? A good calculator will let you enter what you still owe. In many cases, that amount can be folded into the loan you take out.
If you have additional funds for a down payment, even if it’s just a few hundred dollars, make sure you add that to your trade-in value to come up with what you’ll be able to put down on a new car or truck.
3. The Number of Months
You’re best served taking out a loan for as short a period as you can manage. You’ll end up paying less interest on a shorter loan. Plus, you’ll be able to own your car in less time, which makes it much easier to trade it in on a new vehicle when the time is right. A good calculator will make it easy for you to adjust the number of months you want for the loan term, which typically ranges from 24 to 72 months.
4. Taxes and Fees
It’s no fun to have to pay state and local taxes on your vehicle or to pay additional fees like registration. However, these costs are an important part of making a purchase, and the best calculators have space to input tax information. If you aren’t sure about your state’s taxes, do a quick online search for “[Your State] auto sales tax.” Make sure to also check for your city’s tax rate, if any.
Likewise, you can search for “cost of registering a car in [Your State]” to find out about registration fees. Some states and lenders don’t permit you to include these costs in your financing, but it’s best to know about them in advance. They could reduce the amount of cash you have for a down payment, which will impact your total auto loan payment.
Your dealer can answer specific questions about the taxes and fees for the type of vehicle you’re considering.
5. Easy-to-Understand Results
Good calculators update automatically when you make changes, so you shouldn’t need to hit a “calculate my payment” button. This makes it easier to make changes and immediately see how that impacts the final amount.
You should be able to quickly see the estimated monthly payment, as well as the total amount you’ll pay over the life of the loan. This includes the total amount of interest. Some calculators even let you see different loan options side-by-side, which can be helpful in making fast comparisons.
Benefits of Using an Auto Loan Calculator
If you’re unsure about using a calculator to estimate your loan payments, remember that it’s best to have too much information than not enough. Planning ahead to make sure you can afford the monthly payment for the type of vehicle you want can save you heartache at the dealership when you realize you can’t buy what you wanted.
In addition, having a good idea of what you can afford to pay makes negotiating at the dealership much easier. Many sales professionals will work to get you into the most expensive vehicle they can, and you need to know what you can reasonably afford. Having a number for a total payment and a monthly payment can help you stick to your budget and not be talked into buying more vehicle than you can manage.
