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5 Factors to Using a Credit Union Auto Loan Calculator


Buying a car is an exciting experience -especially if it is your first one. It’s often the second largest purchase you’ll make next to a house. But, as with any large purchase, it’s important to do your homework and understand all the factors involved before signing on the dotted line. A big part of that is understanding the total cost of the car. That’s where a car loan calculator comes in.

A car loan calculator is a simple tool that can give you a good idea of what your monthly payments will be for a given loan amount, interest rate, and loan term. It can also help you compare different loans and find the one that’s best for you.

Read on to understand the following five important factors of using a credit union auto loan calculator.

1.Cost of The Vehicle

The first, and most obvious, factor is the cost of the vehicle. The price will be the starting point for all your calculations. Don’t enter the sticker price for the car -use the amount you need to borrow. The reason for this is that the sticker price doesn’t always reflect the true cost of the vehicle. You may be able to negotiate the sticker price down.

If you’re trading in a car, there may be a rebate, or you may be eligible for dealer incentives that can lower the price.

2.New or Used Car

Buying a new vs. a used car will also affect your monthly payments. In general, a new car will cost more than a used car. Cars usually have a 40-50% deprecation rate after five years. However, the interest rate on a used car loan is higher than on a new car loan. The higher fee stems from the lower resale value of a used car.

The type of car you’re looking for may also play a role in your decision. Some models hold their value better than others, so a used car may actually cost more than a new one.

So, your monthly payments might be higher for a used car, even if the loan amount is lower.

3.Interest Rate

The interest rate is one of the biggest factors in a car loan. The higher the interest rate, the more you’ll pay in interest over the life of the loan. Many factors influence the rate, including your credit score, the type of car you’re buying, and whether you’re financing through a bank or a credit union. Credit unions usually have better interest rates than banks.

Having good credit will likely qualify you for a lower interest rate. The same is true if you’re buying a used car. New cars often come with special financing rates that can be lower than the standard interest rate.

Federal reserve rates play a role in car loan interest rates as well. When the Fed lowers rates, it’s usually easier to get a lower interest rate on a car loan.

So, stay up to date on what is going on in the economy before you make a purchase.

4.Loan Term

The loan term is the length of time you have to pay back the loan. Loan terms are usually 24-84 months but may be shorter or longer depending on the lender. The longer the loan term, the lower your monthly payments will be. However, you’ll pay more in interest over the life of the loan.

The type of car you’re buying may also affect the loan term. New cars often have longer loan terms than used cars.

5.Down Payment

A down payment is the amount of money you put towards the purchase of the car. The larger the down payment, the lower your monthly payments will be. However, you may need to finance a larger loan if you have a smaller down payment.

Try to put down 20% if you can.

What Is the Best Way to Get a Good Car Loan?

When you are ready to finance your car, the best way to get a good loan is to shop around. Compare rates and terms from different lenders, including banks, credit unions, and online lenders.

However, the first step starts with your personal finance history. In other words, make sure your credit rating is as high as possible. You can order a free credit report once per year from each of the three major credit reporting agencies: Equifax, Experian, and TransUnion. Depending on your bank, your institution, such as Wells Fargo, may provide your FICO score on your profile when you sign in.

If you have a high credit score, you’ll likely qualify for a lower interest rate, which can save you money over the life of the loan. A lower credit score won’t necessarily disqualify you from getting a loan but will mean you’ll pay a higher interest rate.

For example, if you have a low credit score between 300 -500, you will have to pay as much as 14.59 % interest rate. However, a super prime score of 781-850 means you will only pay 2.34% interest on your car loan.

A Credit Loan Calculator Can Prepare You for an Auto Purchase

In conclusion, using a credit union car loan calculator can save you time and money when buying a car. You should understand all the factors that go into a car loan, including the interest rate, loan term, and down payment. So, it is vital to get financing from an institution that understands what first-time buyers deal with. 


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