Steps For Calculating Monthly Installments On Low Rate Used Auto Loans

Aug. 5, 2010 - PRLog -- It’s very much possible to avail low rate used auto loans that fit your monthly financial budgets. But to get these it is imperative for you to do some research prior to actually applying for a used car credit. And the most crucial is to determine in advance how much you can afford to pay each month on your car loan installments. Here are some guidelines which could guide borrowers in their endeavor to get the best deal.  

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5 steps for calculating monthly auto loan payments

1. Determine how much you can pay every month
It is important for a car loan applicant to determine exactly how much he can dish out each month on his auto loan prior to shopping a vehicle. Currently, there are various options available for financing a used car. But if your credit history is sub-prime you can always apply for a no credit car finance which does not require any credit check.  

2. Calculating monthly auto loan payment
In order to work out the monthly auto finance installments, you need to take into consideration the ticket price of the used vehicle, the duration of the loan granted and the used car loans rates offered which could actually depend upon your credit scores. Normally, banks provide low interest rates but if you credit is bad, the rates of interest on your auto loan finance could be considerably higher.    

3. Add extra charges to the ticket price
Extra charges such as administration or licensing fees, costs for warranty and upgrades need to be added to the ticket price of the vehicle to be purchased while calculating the monthly auto loan installments. Further do not forget to add the sales tax charged on the vehicle purchase.

4. Consider the duration of the loan term
After determining the total value of the used car, you need to consider the duration of the vehicle loan. Some of the lenders could grant you a guaranteed approval car loan only if the vehicle is less than 5 years old. Typically, used car loans are available for much shorter durations as compared to new car finances.  

5. Use the following formula
To get a quick answer about your monthly payment use the following formula on an excel spreadsheet.
Monthly installment = PMT(r, n, P)

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The monthly installment so calculated can be cross verified by using an online auto loan calculator.

Nevertheless, an expert guidance is desirable when applying for affordable used car loans. Currently, many companies offer professional services to assist borrowers to secure cheap best auto loans. However, to get more information and active assistance, it is hereby recommended to utilize the services of reputed online service providers such as Carloans1.

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