A car payment calculator is an important part of auto research. It is crucial because it helps you determine how much car you can afford and how much auto financing will likely cost you each month.

Negotiating at a dealership may not be to the borrower’s advantage.

For example, extending a loan for several months can lower the monthly rate, but the borrower pays more in interest than he or she would with a shorter loan. Because the borrower makes payments for a longer time, often he or she is also upside down on the loan longer — meaning he or she owes more than the car is worth.

Getting to the numbers

Fortunately, a car payment calculator can help you see how much you would be paying so you can determine if financing at a lower monthly payment is worthwhile. To make these calculations, you’ll need to know the total amount paid for the car, the interest rate and length of the term.

Plug in those numbers, and the car payment calculator will show you much you’re paying and for how long as well as the monthly total interest. Try several different scenarios to see what would be comfortable for your budget and payment options that might be better for the long term.

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