How Much Can You Afford to Spend on a Car?

How Much Can You Afford to Spend on a Car?

Indeed, getting a quote for an auto loan might not be as exciting as shopping for your new car. You might like a car that is way above your budget, or the interest rate might be slightly higher than what you anticipated. Here’s when a car loan calculator comes in handy.

A veteran auto loan calculator allows you to get a picture of what your monthly expenses would look like and helps you determine whether a car is under your budget or not.

Check out our article on the best auto loan companies for veterans!

Veteran Auto Loan Calculator: How to Estimate Your Monthly Car Loan Payment

While looking for a car, here’s what comes to mind.

  • What will be the monthly installment?
  • What will be the cost of insurance?
  • Does the car retain its value?
  • What will be the mileage of the vehicle?

And, the most important of all, is the car within my budget?

Using a car loan calculator can help you figure out all these things. Ideally, you should not spend more than 20% of your income on monthly car payments.

You can use a Veteran auto loan calculator to estimate monthly payments, down payments, interest rates, and loan terms. All you need to enter is the interest rate, how much you want to borrow, whether the car is new or used, and the loan term.

Pro Tip – You can use the 20-4-10 formula to get the most affordable monthly payment. Pay 20% down payment, choose the loan term to 4 years, and expect the total vehicle expense of 10%.

Need some help? Read our article on how veterans can get auto loan assistance.

Veteran Auto Loan Calculator Terms You Need to Know

A car loan calculator gives you an estimate of your monthly income by considering the following variables:

Purchase Price

The purchase price is the total cost of the vehicle, including additional charges like tax. Always remember, never go for a car you can’t afford. There are several cases where the person considers the price of the vehicle but fails to include charges like taxes and additional fees. This can increase your monthly income to way above your expectations. Therefore, always choose a car that you can pay off comfortably.

Down Payment

The down payment you are willing to make is a major determinant when it comes to monthly payments. Always remember, the more down payment you make, the more it will be easy to pay off the loan. Also, besides reducing your monthly installments to a significant level, it can help reduce interest rates and loan terms and help you choose a better vehicle.

Try to pay at least 20% down to get more affordable and comfortable monthly installments.

Loan Terms

It’s pretty evident that the shorter the loan term, the easier it will be to pay off the loan. You won’t be stuck with liabilities for a long time.

Despite increasing your monthly installments, it will be beneficial for you to reduce your interest rates. So, you would be able to save thousands before you know it and will be free from liabilities sooner.

Interest Rate

Your auto loan interest rate will depend upon several factors, including the loan term, your credit score, your credit history, and the type of lender you use. Buying a new car rather than an old car can also reduce your interest rates. Having a good credit score can also reduce the rates.

You can improve your credit score by consolidating your debts, paying bills on time, not maxing out your credit cards, and having a fair-to-good credit history.

Are you a disabled veteran? Here’s what you need to know about disabled veteran car loans.

Best Veteran Auto Loan Calculators

Veterans and active military members can access online car loan calculators to get online quotes at preferred discounts. Various military and military-friendly banks and credit unions are willing to offer military discounts to service members and their families.

Navy Federal Auto Loan Calculator

Navy federal auto loan calculator provides you with an estimated monthly payment for a car, truck, van, RV, or any other type of vehicle. All you need to do is adjust the purchase price, down payment, loan term, and interest rate.

You can also fill in trade-in value, cash rebate, and the amount owned to trade-in under the advanced settings. The calculator will show you a graph of how your monthly payments would look like throughout the loan term.

Related:How Are Auto Loan Interest Rates Calculated

For instance, for an auto loan with a 5% interest rate, 48 months loan term, and a purchase price of $40,000, your estimated monthly payment would be $921.

To qualify for an auto loan with Navy Federal, you must borrow a minimum of $5,000 and a loan term of at least 60 days.

Capital One Car Payment Calculator

Capital One’s car loan calculator allows you to estimate your monthly installment by entering the desired loan amount, estimated APR, and the term of the loan.

APR is the total interest you’ll pay throughout the term of the loan. It depends on various factors like credit score, credit history, down payment, and loan term.

The calculator also allows you to get pre-approved for a new or used car so that you can shop under the budget.

Edmunds Auto Loan Calculator

Auto loan calculator by Edmunds considers all aspects of an auto loan and calculates your estimated monthly income. First, you’ll need to enter the zip code of your location.

Then, enter the vehicle details like the vehicle’s sales price, tax rate, cash incentives, and title and registration. After entering vehicle details and zip code, you must enter the trade-in value, amount you own in the trade-in, and the down payment you are willing to make.

At last, enter the loan details like loan term, interest rate, and credit score. After entering all the details, the Edmunds auto loan calculator will calculate the estimated monthly expenses.

USAA Car Loan Calculator

USAA Car Loan Calculator is a self-help tool that helps you estimate your monthly expenses if you go on and get an auto loan.

To use the calculator, select the loan type to auto loans, choose the purpose of the loan, select the collateral modal year and enter details like loan term and loan amount.

The calculator will show the estimated monthly payment, total loan amount, finance charges, and total loan cost.

Other Costs to Consider When Buying a Car

Besides the sticker price, there are several other hidden costs when it comes to buying a car. Here are some of them-

Financing Charges

If you buy a car through an auto loan, the loan amount will include additional financing charges. The amount depends on your interest rate and the down payment. If possible, make a large down payment so that you can avoid these extra charges.

Sales Tax

Sales tax can range from 2% to 8%, depending upon the type of car. You can get in touch with your consultant on how to budget sales tax.

Registration and Title Fees

Registration and title fees include the cost of registering the vehicle, number plate, and title documents. State fees vary.

Dealership Fees

In most cases, dealers charge a particular amount required for all the paperwork. It also includes the delivery charges and the cost to make your car ready for delivery, like cleaning and fuel filling.

Related Article: Should You Use a Personal Loan to Buy a Car?

How Veterans Can Save Money When Buying a Car

Here are a few ways you can save money while buying a car.

  • Try to pay the cost of the car upfront in cash. Opting for auto loans will come with hidden charges and interest rates that will only increase your expenses.
  • Never stick to one dealership. Try to get quotes from different dealers so that you can compare the prices.
  • If you are willing to shorten your expenses, even more, opt for a used car rather than a new car.
  • Try negotiating the final price with the dealer.
  • You can also trade-in your old car in some cases to reduce your liabilities.
  • As a Veteran or a service member, you might be eligible for military discounts.
  • You can also reap the advantages of VA automobile allowance to reduce your expenses.

Don’t Buy More Car Than You Can Afford With a Veteran Auto Loan Calculator 

A vital consideration to keep your finances under check while buying a car is choosing a vehicle you can afford. A car indeed comes with several hidden charges. So, make sure that you know to shop on a budget and repay the loan comfortably.

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