Fall in Love with Help from a Car Payment Calculator

Richard Barrington
LoanBiz Columnist

Article Rating , 4 out of 5 based on 1 votes

One way people get themselves into financial trouble is by setting their sights on owning a certain car before seeing if they can afford it. Once the heart is set on something, emotion takes over and people run the risk of justifying an auto loan they can't afford. Buyers who use a car payment calculator to determine what size auto loan fits their budget can then shop for a car without having to agonize between logic and desire.

Putting the Cart before the Horsepower

Falling in love with a car is an American tradition--it's why style, image, power, and luxury are such big parts of how cars are sold. In fact, a basic rule of sales is to never mention price until the prospective buyer has made up his or her mind.

The way people generally shop for a car plays right into this sales tactic. People see a car on the street or watch an advertisement and decide they want one of those cars. They have fallen in love. Only then do they ask the question "what does it cost?" Even if the answer is more than they expected, they are inclined to believe they can afford that number--after all, what's a few dollars where love is concerned?

At this point, consumers not only have let desire triumph over logic, but they probably haven't even figured out what that price means in terms of a monthly payment. In other words, they've got the process backward--deciding to buy something before knowing if they can even afford it.

Love Might Be Eternal, Auto Loans Shouldn't Be

Auto purchasers should beware of another danger-- focusing exclusively on the payment rather than the vehicle's price. Car loan terms have been stretched out to six years and longer in order to make the payments more attractive to buyers. Experts warn that low down payments and longer terms can cause buyers to become "upside down" on their car loans almost immediately. They recommend that borrowers don't take a loan with more than a 4 years term, and never get a loan with a term longer than they plan to own the car. For those already in a long-term car loan, experts advise them to consider refinancing into a better auto loan.

Getting the process right from the beginning involves researching auto loans first. An online car payment calculator shows what the car payment is depending on interest rate, length of the loan, and the loan amount. It helps borrowers see how much car they can buy while staying within their monthly budget. They can then shop for affordable vehicles.

There is a wide range of vehicles in every price range. Even by narrowing the field, auto buyers still have plenty of opportunities to fall in love. What's most important is that even if that first love fades, buyers end up with a car and an auto loan they can live with.

About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.

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