What Determines a Monthly Car Payment?
When shopping for a vehicle, many drivers find themselves confused when it comes to monthly payments. Wondering what determines your monthly car payment? To help drivers answer this question, we’ve broken down everything car shoppers need to know about monthly payments and what influences them.
Car Loan Amount
The first major factor that influences your monthly payment amount is the car loan amount itself. Naturally, the more money that needs to be borrowed from the lender, the higher your monthly payment will be.
There are two significant ways drivers can mitigate their car loan amount. The larger a driver’s down payment is on their vehicle, the less they will owe monthly. Similarly, drivers who trade in their old vehicle to the dealership can put its value towards their vehicle purchase, which will also result in lower monthly payments.
Interested in trading your vehicle in at Auto Depot Sudbury, but not sure what it’s worth? Drivers can use our online trade-in appraisal tool to get an estimate.
The second factor influencing your monthly car payment is the loan’s interest rate. Higher interest rates will result in a higher payment each month. Auto loan rates can be determined by a variety of financial factors, including credit history, income, current debts, and the loan’s term. As a rule of thumb, drivers with better credit will be able to qualify for lower interest rates.
The loan term is the third factor that will influence your monthly payments. Typically, the shorter the loan term, the higher the monthly payment amount. However, a longer term will result in more interest, which will increase the overall amount owed. Drivers should think carefully about what their current budget allows, and then choose a term limit that reflects their current financial situation.
Calculate Your Monthly Payments
Fortunately, many dealerships, such as Auto Depot Sudbury, allow drivers to get an estimate of their monthly payments. Using our online calculator tool, drivers can input the vehicle’s price, term length, down payment, trade value, and other relevant information to get an idea for how much their monthly payments will be.
Auto Depot Sudbury is the perfect place to shop for your next vehicle in the Sudbury, Ontario area. Our dealership has a wide range of pre-owned vehicles for drivers to choose from. Looking for vehicles that fit within your budget? Explore our vehicles under $15K and vehicles under $25K. Have any financing questions for our team? Give us a call at (705) 673 – 6079 or send us a message right here online.