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How best to use auto loan calculators

Buyers searching for a new car should use auto loan calculators to compare financing options.

If you're looking for a new car loan, here are four ways to use calculators to get the best deal.

Figure your monthly payment

You'll need to know the total price you plan to pay for the car as well as the interest rate you've been offered. Enter these numbers into the calculator and it will display an estimated monthly payment.

In addition to figuring out the payment, you can play out different scenarios by adjusting the car's purchase price or by changing the interest rate. Shifting these variables will show you how much your monthly payment would increase or decrease if, for instance, you made a larger down payment.

Learn how much car you can afford

If you have a set amount to pay in your monthly budget, auto loan calculators can compute the total cost and length of the loan. Enter your target monthly payment, interest rate and the term of the loan and you will see the total purchase price you can afford.

Evaluate auto refinance options

If your current auto loan interest rate is too high, you might qualify for a lower rate loan at a bank or credit union.

But is it worth it to consider refinancing your current car payment? There are costs involved in taking a new loan. Use auto loan calculators to evaluate those expenses and determine if refinancing will save you money. You'd need to know the total amount of the loan, the interest rate and what fees are involved with securing the new loan.

Compare financing offers

It can be hard to choose, say, between a low-interest rate offer with no rebate and a high-rate offer with a rebate. Auto loan calculators can help you determine how much money you'll save in each case. That way, you can make the best choice.

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