Below, we have explained how to use our auto loan calculator in the most efficient way possible.
How Does The Auto Loan Calculator Work?
Are you on the hunt for a new car or motorcycle? If yes, our auto loan calculator will help you make all the fine calculations and find out how much you can afford. It includes every kind of fee applicable to an auto loan so that you don’t get caught unawares when the time comes. We have explained the various parameters used by the calculator below.
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Sale Price + Options
The first section is quite straightforward – how valuable is the car you’re taking out a loan on? An essential difference between a conventional loan and an auto loan is that in most cases, a regular loan does not require you to put down collateral. On the other hand, when you take out an auto loan, the car itself is collateral. This provision means that if you miss a payment, your vehicle will be seized. So make sure you’re within your means.
The destination charge, or more simply, the delivery fee, is the money dealerships charge you to transport your vehicle from the factory to their lot. Dealerships can charge anywhere up to $1000 for delivery. So it is a wise idea to include this cost in your auto loan plan.
Title Transfer Fee
This section is applicable only if you are purchasing a used vehicle. The title transfer fee is what you pay to transfer the title of the car to your name. For example, if you are taking out a loan on a brand-new vehicle, the title transfer fee will be zero. On the other hand, if the car is second-hand, you will have to pay a small fee – the DMV charges $15. However, some states levy extra charges.
Other Taxable Fees
In this section, Include any other fees that might be applicable in your case. For second-hand cars, this can include special procedures like smog check.
Trade-In Is Tax-Deductible
This section depends on how you plan to use the vehicle. If you are going to use the car solely for business, you are eligible for a tax deduction. This provision means that the interest accrued will be deducted from the part of your income not considered for taxes. This exemption, in turn, reduces the amount of taxes you have to pay. Different regions have different laws regarding this. However, like in most cases, if you are going to utilize the vehicle only for personal matters, you do not qualify for a tax deduction. This ruling is because the car is considered a luxury.
Cash Rebate Is Tax-Deductible
In this section, you specify whether the cash rebate – the money you receive from your bank in specific schemes – is tax-deductible or not, as explained above. Again, this depends on the policies of the bank and the dealership.
State Sales Tax Rate
A sales tax is a tax the government imposes on the sale of specific goods and services. Just like any other consumption tax, the seller is entitled to charge the customers the tax amount. You have to factor in this amount for your auto loan plan. Each state has its regulations surrounding the value of the sales tax. In this section, type in the tax rate of your state.
In this section, mention the fee collected by the DMV for registration of the vehicle. The amount varies according to the type and cost of the vehicle.
In the next section, specify any fee you might have to pay if you fail to apply for registration within the stipulated time.
A service contract is a contract promising free maintenance of your vehicle for a certain period after purchase. This section mentions the amount you have to pay to secure a service contract with the dealership. The cost of a service contract is often negotiable.
Special Plate Fee
As you might know, vehicle-buyers have the option to customize their license plates and numbers. This customization comes at a price, however. Enter such expenses incurred in this field.
The next few sections all involve minor charges that are levied by the DMV during the registration process. The administration fee and transaction fee are collected to fund logistics. The late title transfer fee is self-explanatory – you have to complete the title transfer procedure within the stipulated time. You have to pay a duplicate title fee if the old title has been lost or damaged, and you need a new copy.
Unpaid Loan Balance on Trade-In
When you trade-in your old car, it is imperative that you have paid off any loans taken on that vehicle. However, if you are returning to the same dealership where you bought the car, you can usually carry over any unpaid balance. You want to cover this additional balance in your auto loan too. This section is where you add it.
The last three sections are for sums that decrease the loan amount. For instance, all auto loans require an upfront down payment. This amount will be deducted from the total value of the automobile. Similarly, the cost of your trade-in car will be deducted from the loan amount. The same goes for any cash rebates you receive.
Once you fill in all these costs and hit Calculate, the calculator presents a concise summary of how much the total purchasing price is. It also tells you how much sales tax you will have to pay in total, along with a compilation of the total miscellaneous fees. Finally, factoring in all the deductions, you will arrive at the exact loan amount you need, all factors considered.
While buying an automobile, new or second-hand, can be exciting, the financial aspect can be a huge roadblock. Auto loans are certainly a logical choice, but there have been too many instances of prospective buyers biting off more than they can chew. You can use our auto loan calculator to avoid just that and make informed decisions on what kind of motor vehicle to purchase.