can finance calculator – When applying for an auto loan, you may want to use a calculator like this one. Therefore, we provide you here with the best way to calculate the price of the loan that best suits your needs!
Car loan calculator: how it works
The auto loan calculator helps the user to objectively estimate the total cost of the loan.
The calculator is very easy to use. The user enters some of the most relevant information about the loan into the calculator, after which the car loan calculator uses this information to determine the actual cost of the loan.
These are some fields to fill in the calculator:
- desired amount of money
- Nominal Interest Rate (TIN)
- Equivalent Annual Rate (TAE)
- opening fee
- Commission or management fee
The desired amount of money is the amount that the user intends to get. On the other hand, the repayment time (in months) refers to the payment period, that is, how long will it take to repay the loan in full.
The interest rate is the interest rate of the requested loan. It advisable to enter the nominal interest rate of the loan, also known as TIN, so that the car loan calculator does not include administration fees and fees in the loan and, above all, that it is not calculated twice.
The origination fee refers to all the costs and expenses related to the origination of the loan. The origination fee includes all the one-time payments that come with receiving a loan.
It is recommended that the consumer include in the commissions or loan management fees all the monthly costs outside the interest rate of the car loan. In this way, the auto loan calculator can calculate the actual cost of the loan using monthly expenses without interest.
Car loans in Spain 2021
One of the most requested loans in Spain during 2021 has been the purchase of cars.
This is due, in part, to the increasingly striking promotions, both from banks and from online lending houses.
In such a way that this market looks increasingly competitive. In this sense, it is convenient to know all the available offer before signing a contract.
So if you are thinking of financing a new car, we recommend you read this article to the end.
The best car loans in 2021
Most banks and online loan houses finance cars in the Spanish market. It is a very attractive business, since the level of risk is minimal, since the car itself serves as collateral.
However, it is convenient to know some keys to recognize the best loans. The first object you should do is make sure that the financing covers at least 90% of the total cost of the car.
In general, when this happens the interest will be lower. The other thing to look for in a car loan is that the repayment period is between five and seven years. This will give you more economic slack.
If you get these two characteristics in any of the offers, you will surely be hiring one of the best car loans.
How much does a car loan cost in 2021?
To finish, we will see an example that illustrates the amount of a car loan in 2021 in Spain.
Suppose that the amount of the loan is 20 thousand euros and the payment term is five years. For this, a fixed APR of 6.27% would be applied.
In this case, the monthly cost would be €388.00/month, to which a TIN of 6.1% must be added. Thus, you would have to return, approximately, a total of 23,251.00 euros.
Why use a car loan calculator?
The car loan calculator helps the consumer to calculate the total cost of the loan. It is up to the consumer to enter the loan information. The auto loan calculator then calculates the actual cost of the loan based on this information.
After completing the calculation, the car loan calculator provides the user with the following information about the cost of the loan:
- Amount to return monthly
- Equivalent Annual Rate (TAE)
- Total amount to return
- Opening and management expenses
The amount to be returned monthly is the amount of money that the consumer must pay every month once they have received the loan.
The APR or Equivalent Annual Rate is the real annual interest rate.
The nominal interest rate or TIN, by itself, is not enough to adequately reflect the cost of borrowing.
The total amount to repaid is the total repayment of the loan including the fees and interest associated with it.
Finally, the car loan calculator calculates the difference between the total amount of the loan to be repaid and the amount of the original loan.
Practical example of how to use the calculator
Next, let’s see a practical example of how to use this car loan calculator and how it can help us.
Imagine a user named Marta. Marta has been dreaming of buying a new car for a long time and after thinking about it carefully, she has decided to apply for a car loan.
Marta ends up requesting a car loan, without thinking too much about it, for an amount of 20,000 euros and a repayment period of six years.
You get acquainted with the services of some of the most popular loan providers and end up choosing a contract with a nominal interest rate of 7.5% (TIN).
In addition to the 7.5% interest rate mentioned above, the loan contract chosen by Marta includes an origination fee of EUR 300 and monthly account management costs of EUR 7.
However, Marta decides to use an auto loan calculator before accepting the offer of this loan.
Martha enters the offer information into the calculator and begins looking at the actual cost of the loan.
The car loan calculator informs Marta that the Annual Equivalent Rate (the APR) stands at 9%, which surprises Marta, since it is more than she thought.
What can we learn from this example?
The example in the previous paragraph is obviously fictitious, but it reflects many common mistakes consumers make when applying for a loan.
The following paragraphs reveal the mistakes made by Marta, as well as those that the user should consider when applying for a car loan.
Loan amount and repayment period
The first mistake made by the person in the above example was that the loan applicant did not carefully consider the amount of the loan and the repayment period.
The full amount of the loan must taken into account when making the purchase of a car, and more specifically the one that replaces the desired purchase price.
The repayment period should always be as short as possible, as this would considerably reduce the interest rate costs of the loan.
However, when considering the repayment period, it is also extremely important to realistically and critically consider our own creditworthiness.
In addition, we recommend thinking carefully about how we could repay that same loan if our circumstances changed, even in financially difficult months.
The best loan is obtained through a comparator
Another mistake made by Marta, in the example above, was looking at the services of only a few lenders. In this case, the most popular loan providers.
If the consumer wants a truly affordable loan offer, it is convenient to compare between the different offers in the complex market of loans.
When applying for a loan with several entities at once, it possible for a consumer to quickly and effortlessly receive offers from many different service providers and this directly reflected in the total cost of the different options offered.
You didn’t know this about interest rate differences.
When applying for a loan, the consumer should already know the difference between the TAE (Annual Equivalent Rate) and the TIN (Nominal Interest Rate).
The consumer must remember that only the interest rate of the product included in the TIN, while the APR is the actual price that includes all associated costs and that establishes the quality of a loan.
Taking into account the APR is vital in the process of applying for a car loan. Only by observing this can the consumer be sure to find the loan that best suits their needs. And this loan calculator significantly helps the consumer to do just that: to calculate the APR.
Although regulations often require different service providers to indicate the APR for a car loan, the consumer may receive advertisements in which only the TIN indicated. So from Comparazona, we advise you to know the different concepts of a loan well.
The consumer should use a car loan calculator to make sure they know the real cost of the product they want and are about to hire.