NEWS

# How to Calculate a Car Payment

Cars.com illustration by Paul Dolan

How much is that new car actually going to cost you? There are a lot of factors to consider. If you want to estimate the monthly payment for the car of your dreams or crunch some numbers to set a realistic price range before you start shopping, you’ll need to know (or be able to estimate) three key variables:

• How much you intend to borrow
• The interest rate of your loan
• The length of your loan

Using the  Cars.com Loan Calculator, pop those numbers in to figure out how much you will pay per month and then try different scenarios to see which ones best fit your budget.

The calculator allows subtracting a down payment and any trade-in value from the price of a new vehicle and allows adding sales tax for a more accurate payment estimate. Those variables might change during the purchasing process, and sales tax is figured at the closing of a car purchase, so the calculator lets you skip those and obtain a rough estimate.

For example, borrowing \$30,000 for 72 months at 4.61 percent interest works out to a monthly payment of \$478.

Many consumers shop for vehicles based on how much they can afford per month instead of focusing on the price of the vehicle. Cars.com covers that with the Affordability Calculator, which allows plugging in a monthly payment amount and other factors to estimate how much you would likely be able to borrow.

For example, if you’re setting a maximum monthly payment of \$400 on a 60-month loan at an interest rate of 4.61 percent, the most you would probably be able to borrow is \$21,398.

Note that these estimates do not take into account all possible costs in purchasing a vehicle, such as tax, document, registration and license plate fees, extended service contracts or accessories — all of which you will either have to pay upfront or add to the amount you’re borrowing.

In addition to using a loan calculator to estimate monthly payments, it is a good idea to shop for financing before shopping for a car to find out how much lenders will give you and at what interest rate. This also gives you a point of comparison for the financing that a dealer may offer you.

Dealers will do everything they can to get you financed, but they might not offer you the best interest rate for which you qualify.

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