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Car Finance Calculators: What You Need to Know

March 22, 2016

In the world of car finance, a quick quote can be the key to finding the best deal. From the repayment period to the amount you’re looking to borrow, there are a number of factors which influence the size of your monthly payments – and car finance calculators are a quick and easy way to find an online quote.

If you’re feeling overwhelmed by car finance jargon and would rather get down to brass tacks, you’ve come to the right place. Here, you’ll find everything you need to know about car loan calculators – giving you what you need to apply for finance with complete peace of mind.

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Loan amount

This is where you can select the amount you’re looking to borrow – based on the sale price of the model you want, among other factors. From the cheap and cheerful Skoda Citigo to the large and in charge Range Rover Sport, car finance deals give you a chance to buy the car you want at a rate you can afford – so the price tag doesn’t have to be a dealbreaker, as long as you can keep up with your monthly repayments.

With car loans available from £3000 to £50,000, you can apply for finance to fund the car in its entirety, or use what you borrow as a top-up – with no restrictions on how you spend your loan. For example, you might prefer to borrow more to cover the cost of the car, as well as your insurance and road tax.

Credit score

Thanks to sites like Experian and Noddle, you can access your credit report online (for free, in some cases) – giving you detailed information on your eligibility when it comes to securing a loan. This information is also available to car finance lenders, who’ll often use what they find as an indication of whether or not you’re a ‘high-risk’ borrower.

Once you know your credit rating, you can input this information using the car finance calculator – giving you a better idea of the monthly repayments and APR rate you’ll be looking at. If your credit score is less than desirable, that doesn’t have to restrict your chances of securing a loan. Thanks to the range of UK lenders able and willing to offer bad credit car finance deals to applicants with a history of late payments, you should be able to find an affordable option regardless of your rating.

Repayment period

The flexibility of car finance deals means you have the power to decide how much you borrow and when you pay it back. With repayment periods ranging from 12 to 60 months, you can spread what you owe for a more manageable monthly obligation.

It’s worth knowing that, the thinner you choose to spread your monthly payments, the more you may end up paying in the long term. Pay close attention when using the car loan repayment calculator to make sure you’re getting the best of both worlds (i.e. affordability in the short and long term).

Monthly repayments

As part of your car finance quote, you’ll get an estimate on how much you’ll need to pay back each month. This figure may vary dramatically, depending on the size of your loan, your credit score as it stands and the length of time you’d like to repay your loan in full.

The nature of car finance is that it offers drivers an opportunity to buy a car they can’t afford or justify up-front – with manageable monthly payments to help them drive the car they want at a rate that works for them. When browsing car finance rates, consider whether the monthly repayment figure you’re being quoted is within your budget – and if not, it may be better to assess your options before taking the next step.

APR %

The annual percentage rate (APR) is the amount of interest charged on your total loan amount – and you’ll pay this annually, averaged over the full term of your loan. APR accounts for any up-front fees charged by your car loan lender, and is spread out over the course of your repayment period. When using a car payment calculator like ours, you’ll get an APR estimate as part of your quote.

‘Representative APR’ gives you a rough idea of the interest you’ll pay on your loan – which you’ll notice increases as your credit score lowers. Put simply, this means that lower risk applicants (i.e. those with more impressive credit ratings) can expect to pay less in the long term – with all other things being equal. Car loan interest rates are often used as a means of comparison, but you’ll invariably find that APRs are higher for poor credit holders.

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Got it? Give our car finance calculator a try today for an instant quote on how much you could borrow, and the monthly sum you can expect to pay.

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About The Author

Jon Le Roux is co-founder and company director of The Car Loan Warehouse. Being a mad engineering and motorsport enthusiast, I spend more hours than is healthy, watching, reading or talking about cars, boats, motorbikes…..basically anything with an engine.