Calculating your monthly car loan payments can be tricky, when buying new wheels. Even if your new ride is just new-to-you, this exciting (but stressful) experience is often strewn with uncertainties and doubts. That’s why the financing experts at Canada East Rides designed this easy-to-use auto loan calculator. Just keying in a few figures helps you make the smartest auto loan decision for your budget. Although longer terms with lower monthly car loan payments may initially seem more attractive, you should think twice. Long loans can easily ‘go underwater’. This happens when unwary buyers get trapped in a negative equity spiral. Rising upkeep and higher repair costs for aging vehicles outstrip market values. This means they are worth less than the outstanding amounts still owed.
The total cost of your car is also affected by many other factors, starting with your credit score. They include how much you can offer as a down payment and how much you need to borrow. Other important aspects are the interest rate and loan duration. Additional once-off outlays usually include registration and title transfer costs, together with documentation and destination charges.
Don’t Forget All These Other Car Loan Payments in Newfoundland
Monthly expenditures pump up your costs constantly, often driven by factors beyond your control. Insurance, road tax, and parking fees are recurrent expenses, while maintenance and fuel costs rise steadily. Every autumn you’ll need to check your winter undercoating and strap on snow tyres, thanks to the Maritimes’ harsh climate.
Help Me Avoid an Upside-Down Car Loan
But don’t fret. There’s no need to lose money when buying a car, if its resale value drops below how much you still owe. Here are some expert tips from the financing experts at Canada Rides East on how to avoid getting upside-down on your car loan:
- Avoid rolling over old auto loans: Rolling over old auto financing into a new loan can increase the amount of negative equity on your new loan. Instead, pay off your previous car loan before taking out new financing.
- Make a larger down payment: This reduces the amount of money you need to finance, so it’s easier to pay off your loan and avoid going underwater. Aim at 25% of the car’s value, as a good starting point.
- Pick a model that holds its value: Some cars depreciate more quickly than others. So research depreciation rates before making your shortlist, and choose a car that’s known to hold its value over time.
- Maintain your car regularly: Keeping your car in good condition will help keep its value high during your loan term. Regular upleap means getting it serviced, keeping it clean, and fixing any problems as they arise.
- Choose a shorter loan term: Choosing a shorter loan term will help you pay off your debt more quickly and lessen the risk of negative equity. A shorter term also reduces the total amount of interest you pay on your loan.
- Think twice about long-term financing: Longer-term loans are tempting, with lower monthly car loan payments, but they also increase the risk of negative equity. Try to avoid loans that are longer than sixty months.
Takeaway Tip on Monthly Car Loan Payments
As a general rule, your monthly car loan payments in Newfoundland should never top 15% of your after-tax income. While keeping enough to cover your normal living expenses, you should also be saving 5% to 10% of your earnings. The clever way is to open a separate account, and use this amount as a deposit on your next ride. With careful planning, this will actually lower your car purchase costs when its time for a new set of wheels!
Check Out the Best Car Loan Payments! Fill in this simple form and we’ll design the perfect auto loan for you in Newfoundland: