Whether you are a first-time car buyer or a long-term driver, it helps to understand how a car loan is calculated. To better assist car shoppers in New Castle, Wilmington, and Newark, DE, our team at Sheridan Nissan put together this car loan calculation guide.
What Is a Car Loan?Once you find a vehicle you love in our inventory, the next step is financing, which is where car loans come into play. A car loan is a certain amount of money that is borrowed from a lending institution to cover the cost of a vehicle.
When you make payments on your car loan, you will be paying back the remaining balance for the cost of the car, as well as the interest that accrues.
The down payment is the amount you pay up front for the car out of pocket. After depositing a down payment, you will then use your car loan to pay off the remainder of the balance over a specified period.
Another factor related to your down payment and thus your car loan payments is whether you decide to sell or trade in your current vehicle. The cash or credit you receive for your trade-in can then be applied to your down payment.
In the following table, you will see various factors that can impact the amount of your monthly car loan payments:
|
How Is a Car Loan Calculated? |
|
|
Car Loan Term Length |
Longer terms usually result in lower monthly payments. They do accrue interest, which is worth considering when selecting a car loan. |
|
Interest Rate or Annual Percentage Rate (APR) |
Set percentage you pay to borrow money from the lending institution. |
|
Principal Amount or Amount the Loan Covers |
Amount you borrow from the lending institution, or the value of the car minus your down payment. |
In addition to the length of your car loan, you may also have options when it comes to your repayment schedule, such as bi-monthly or monthly payments. Our well-connected finance team will contact lending institutions in the area to assist you in securing a car loan that best fits your unique lifestyle, needs, and preferences.
Auto Financing: Calculating Car LoansWhen you visit our finance center, we will help you develop a plan you feel confident about as you embark on your next adventure in your new vehicle. Using our convenient car loan calculator, you can compare the numbers for multiple vehicles, as well as a variety of car loan payment options by adjusting factors like the following:
Playing out different options with our car loan calculator can help you quickly narrow in on your top choice.
At Sheridan Nissan, we look forward to helping New Castle, Wilmington, and Newark, Delaware, drivers take the wheel of a vehicle they love with a car loan they feel excited about. As you explore our virtual resources, contact one of our finance associates today to learn more or schedule an appointment!
