When you shop for a classic, new or used car, the number to pay the most attention to is the total payment amount. It normally goes way beyond the sticker price. It’s the loan amount plus the taxes, title, fees and interest — how much you’ll pay a month. J.J. Best Banc & Company wants you to keep in mind you want to balance the shortest possible loan term with a monthly payment that you can afford.
Let’s say you’re looking to buy a new car for about $20,000 and want to pay less than a rate of $300 a month. You might think about taking out a six-year loan so you can “buy more car,” but look at the auto loan comparison chart below. The total payment of a six-year loan turns that $20,000 car into a $25,500 car.
So, then you decide on a four-year loan. What would be the monthly rate? But as the auto loan comparison chart shows, that means a monthly rate calculates to more than $100 a month rate higher, you can’t afford that.
The last box in the auto loan comparison chart shows how much it would cost if you bought a $15,000 car instead of one for $20,000. You would still have a monthly payment you could afford (less than $300) and save $2,000 in interest payments. The monthly calculated rate would be one that wouldn’t over extend your budget.
The lesson here is, don’t compare makes and models, do the auto loan comparison, calculations and rates to understand what it will cost you to get a payment you can afford, then find a car you like that fits the number. You can use this chart here to calculate what your payments may look like.
Total Auto Loan Cost
| Term | 4 Years (48 months) | 5 Years (60 months) | 6 Years (72 months) | 4 Years (48 months) |
|---|---|---|---|---|
| Listed Price | $20,000 | $20,000 | $20,000 | $15,000 |
| Taxes, Title, and Fees | $2,000 | $2,000 | $2,000 | $1,700 |
| Down Payment | $4,000 | $4,000 | $4,000 | $3,000 |
| Loan Amount | $16,000 | $16,000 | $16,000 | $12,000 |
| Interest Rate (APR) | 7.02% | 7.02% | 7.02% | 7.02% |
| Total Interest | $2,397 | $3,017 | $3,651 | $1,797 |
| Monthly Payment | $383 | $317 | $273 | $287 |
| Total Payment | $24,397 | $25,017 | $25,651 | $18,497 |
Ready to Apply for a Car Loan?—Apply online at JJBEST.com or call your personal Loan Officer at 800-USA-1965. We look forward to servicing you.
