A lot of people dream of owning their perfect car, but they might think this can never happen in reality. However, getting the car you’ve always wanted isn’t as unachievable as you think. Car financing makes it possible for people to get their ideal motor on finance and pay it off monthly with ease. You could even obtain car finance on benefits, so there’s options out there for all. However, when it comes to getting a car on finance, there is the total cost of the car to think about, as this is what you’re working towards paying off. So, keep reading and discover how to calculate the total cost of your car financing.
Cost Of The Car
The first thing you need to take into account is price of the car that you are financing.
Down Payment (or deposits)
Down payments can be useful things when taking out car finance. These are when you pay off a deposit that then lowers your monthly repayments. This is because your total repayable amount is now less, so having a sizeable deposit could affect the total cost of your car financing. Make sure you take this into account when calculating anything so that you don’t think you have to pay more than you could.
The interest rate will be important when it comes to your total cost of car financing as it will determine how much extra you pay on top. The interest rate (APR) will be different depending on which lender you go with, so it’s important that you know what yours is when calculating. It’s always a good idea to shop around to see who can offer you (and your personal circumstances) the best APR as you’ll hopefully be able to keep your total costs down.
The Term Of Loan
When you take out car finance, there will be an agreed loan term that you’ll have to make your repayments during. It’s worth noting that the longer the agreed term, although your monthly repayments could be lower you’ll end up likely paying back more as you’ll be paying interest longer. So, while a shorter loan term may mean your repayments are higher each month, you could end up saving money in the long run.
Car finance can be a brilliant way to have access to the car you’ve only dreamt about as it allows you to spread the cost out over a longer period of time. However, the total cost of it does need to be taken into account, as it could be more than you think. So, make sure that you take all of this into consideration when trying to calculate the total cost of your car financing.