Before you take out a car loan, you need to know one key thing – how to pay it back. Our car loan repayment calculator can show you exactly what you’ll need to pay each month.
Payments fluctuate based on the amount you borrow, if your loan is secured or not, and the amount of time you ask for in your payment scheme. Scroll down to see how to calculate your monthly repayments before you apply so you can feel confident in your decision to get a loan.
Scroll down for more information on finding the right loan, how to use our loan repayment calculator, and make sure you have the budget to borrow.
What car loans are available?
Car loans fall into one of two categories, secured and unsecured loans. A secured loan comes with lower interest rates and tend to be offered to borrowers with good credit histories and a higher income. If you keep up with credit card payments, make more than 50,000 AUD a year, or have good assets like property in your portfolio, you may qualify for a secured loan.
Unsecured loans tend to go to people who have a lower income, debt, or a bad credit history. Before you dive into a loan repayment calculator, run a credit check on yourself so there are no surprises with your loan application. Once you know what your credit looks like, you can make a plan to improve it and then present that plan to your loan officer.
The second option comes with higher interest rates, so you’ll need to factor that into your loan repayment calculator and budget. Both are viable options and neither should pose a problem as long as you make regular payments each month.
Our Car Loan Repayment Calculator
Before you find your total repayment, calculate your available income you can use to repay your car loan. Don’t spend more than 15 percent of your monthly pay on a loan repayment or else you may not be able to cover your essentials.
Once you have your maximum amount you can spend, then take a look at the car loan repayment calculator. If the best number you can hit is above that 15 percent, contact a loan officer to see if there’s another option available. You can also take a look at the following section on budgeting to help you cut back on other costs to help you get your car.
Start with the price of the car. Keep in mind that used cars have a cheaper price upfront but lenders require a higher interest rate as they tend to have more wear and tear and need repairs sooner than new cars. New cars will attract better interest rates and payment schemes, so try to get a new model if that’s feasible for you.
Once you have the price of the car, determine how much you need to borrow. If you have some money set aside for a vehicle, add that to your loan repayment calculator.
Then consider how long you want to spend repaying the loan. A longer repayment period will cost you significantly more in interest. A fast, one or two-year repayment will cost more in principal payments, but you’ll spend less time in debt and get a much lower interest rate per annum, (p.a.)
Here’s an example
Debbie wants to get a nice SUV so she can drive the kids to school and start a small business delivering baked goods. She has an income of 45,000 AUD from her job managing an office and about 90,000 AUD in savings. She also owns her house and has a solid credit score of 790.
The car she wants is a hybrid – a Ford Escape PHEV and she plans to buy a new one for $52,490 AUD. She has enough in her savings to cover the price, but she needs capital for her business. Also, she’s left her job so every dollar counts.
Debbie decides to borrow about half the cost of the car, 25,000 AUD, and try to pay it back in two years. She can get a secured loan thanks to her healthy relationship with the bank. Her good credit score also gets her interest rate down to five percent, but only if she can pay it back in three years.
With this payment scheme, Debbie needs to pay 1,097 AUD per month to her lender.
Debbie can adjust the time on her loan, but she’ll pay much more in interest with the additional time. As it’s structured above, the total loan will cost her 26,328 AUD over two years, a more than reasonable amount.
Figure out our your monthly loan payment, (and compare rates)
Here’s a loan repayment calculator to help you find what you need to pay each month and to help you shop around for loan rates.
|Calculate your interest
|How much you need to pay in total
|Your monthly charge
|Take the amount you want to borrow, (the principal, P), times the interest rate, (the R), times the term or amount of time, (T).
The formula is expressed as:I = P x R x T
|Add your principal amount column and the number from the “interest charged” column.
|Calculate how many months total you’ll need to send payments. Divide the number in the Total Amount column the number of months.
|Option A, (example)
Remember, no loan officer is required to give you the best rate possible. That’s why it’s important to talk to different brokers about their best loans so you can find what works best for you and your budget.
Get your car loan today with LendEasy
When you’re ready to get started with a new car, LendEasy can help you find a great loan and broker an incredible rate and payment scheme. Let us show you how each payment breaks down on our loan repayment calculator and how we work differently from the competition.
A new car can be the difference between a job and your dream career. Don’t let your chance pass you by – book a discovery call with us today to get the money you need for your new car.