Want to know about the cost of car loan repayments? Get advice on finding car finance repayments that fit your budget...
Want to know more about the cost of car loan repayments and what your options are?
The amount you have to repay on your car loan each month might be one of the most important factors financing your car.
No matter how manageable a loan repayment amount might sound, if you don't have a handle on your budget it could be more than you can afford!
1. Understand your budget
If you haven't done a budget for a while - or never have - it is worth taking a few minutes to understand exactly how much of your income you have spare to use for loan repayments.
There are some great online budget planners available that do most of the work for you.
2. Put your car in context
If you know you can afford car loan repayments, also take a moment to consider...
- What other financial goals (or obligations) do you have?
- When do you want to achieve them?
For example, if you're planning a big holiday next year, paying for airfares and spending money could take a chunk of your income that you need to plan for now.
These questions could influence the repayments you want to commit to.
3. What you can afford
Once you know how much you want to put towards car loan repayments from each pay, you can work backwards:
- Use our Car Loan Repayment Calculator to figure out what you can borrow
- Find a car that suits your budget
The main variables of your car finance that have an impact on your repayment amounts are:
Amount you borrow
The most effective way to reduce your repayments may well be to spend less on your car purchase so you borrow less, or put up a bigger deposit.
Spreading your repayments over a longer period reduces each repayment amount (but could increase the total cost of the finance!).
Interest & fees
Interest is built into your repayments. The more your loan costs you in interest, the more you'll have to pay back, either through larger individual repayments or over a longer payback period.
A car lease can reduce the regular repayment amounts you make by defer a large one-off payment at the end of the lease term.
Whether it's a loan or a lease, LoanLocator can help tailor a solution to fit your budget - Sponsored Link
Tip: The price of a car for sale can sometimes quoted in repayment amounts – for example, $80 per week. While this may sound appealing, make sure you ask more about the loan, like what the interest rate is and how many years you’ll be making the repayments for. You may find there are better deals out there!