How is a car loan payment calculator
How to calculate car loan payment
in this video I'm gonna show you how to
calculate the interest on your car loan
and figure out the car payment so you
can make sure that you're not overpaying
if there's your first time at our
channel or you haven't subscribed click
on the subscribe button at the bottom my
name is Travis sickles certified
financial planner we stick alone or
financial advisors I bought my car about
two months ago and I just could not
believe the amount of games that were
being played when I went to go and
finance the car the interest payments
and the interest rates just did not line
up luckily I had a tool and a little
knowledge and I want to give you that
tool and I want to share that knowledge
and I'm also going to show you a bonus
tip that'll make it so much easier so
when you walk into the dealership you're
not going to get taken for a ride so the
parts of the loan that you need to be
familiar with the timeframe of the loan
so is it a three or four year or
five-year loan the interest rate that
we're dealing with how much we're paying
on that loan the actual amount you're
financing so it's probably not the whole
car it's probably a portion of the car
so we want to look at that and of course
the payments and getting that thing paid
off as quickly as possible those are the
parts that we're going to talk about and
I'm gonna go through them and I'm also
going to show you this great app you can
download on your phone and bring it to
the dealership with you so you can look
at the math on your terms I'm gonna put
a link in the description at the bottom
to the actual calculator that I used now
if you use a variation of it that's fine
too I don't collect a fee on it there's
no referral it's not a referral link or
anything like that you can go download
it I think it may be cost one or two
dollars maybe a little bit more but it's
a great tool and it'll save you way more
than a couple of dollars so let's jump
into it right now so here is the
financial calculator that I'm going to
walk you through I'm gonna give you this
example and let's say that you have a
car loan that you are gonna pay for over
a five year period we're gonna have an
interest rate of three percent we're
gonna finance twenty thousand dollars
and I want to figure out what those
payments are gonna be I don't want the
car dealership telling me what those
payments are because their math
sometimes gets a little fuzzy and if you
believe me I'm gonna show you why so
let's take a look at this so the first
thing we need to do for this calculator
is we need to take this payment and make
sure that it says 12 so it should say 12
payments per year equals 12 the way you
do that is you hit 1 to shift and then
hit this payment key right up there and
you could see that it brings 12 here and
12 up there and if you did one payment
same thing you can see it says 1 versus
1 so we want 12 payments because we're
paying the loan monthly so we're gonna
start from left and go work our way to
the right so all these buttons up here
is what we're looking at so this looks
more complicated than it is so I'm gonna
walk you through it so let's say we have
a five-year loan so the first thing
we're gonna do is we're gonna hit our 5
and then hit shift and then come up here
and hit n and you can see it says 60
months so it's gonna be 60 months we
want to put in the interest rate so what
we need to do is hit 3 shift and then
the interest and you can see that it
says 3 now the present value PV which is
the amount that we're financing is gonna
be $20,000 so we'll hit 20,000 hit the
PV to see 20,000 up there and we want to
figure out what the payment is so we'll
hit 0 for our future value because at
the end of the 5 years the loan will be
paid off so if we tap on the PMT we
could see that it says 359 point 3 7 so
that's what our payment is it says
negative because it's a payment it's an
outgoing transaction so this will be our
payment so let's say that we get to this
math and we figure out that we cannot
pay three hundred and fifty nine dollars
so what we can take a look at is we can
either extend it past five years or we
could put more down to get a lower
payment so let's put more down to get a
lower payment well if you already know
what we can pay what we could do is say
let's say it's three hundred dollars
that we can pay we're paying it so we're
gonna hit the negative key and we can
put it in write for the payment then if
we click on the present value we can see
that it drops to sixteen thousand six
six what that means is if we financed
this amount at 3% for sixty months then
we'd have a payment of three hundred
dollars of course that requires you to
put more down upfront but this is how
the general math works now let's say
that we went to six years on that same
loan and we'll bring this back up to our
twenty thousand dollars then you can
also see that it drops from our original
amount to three three hundred and four
dollars so if we go back to the five
years we could see it was at three fifty
nine Lord if we extend it out further
it'll bring that payment down but that
doesn't mean our total interest is going
to be less it just means that our
payments are gonna be less and that's
where the real game comes in so you want
to make sure that the total amount that
you're paying is what you're comfortable
with so there's another way that we can
take a look at this now this screenshot
is on my iPad but you can do the same
math right on your iPhone I'm just using
my iPhone to do the screen recording so
I can show you how it works so there's
actually a simpler calculator if we hit
this purple button or this blue button
right here and we hit the worksheet
it'll bring down this little menu and
the first one is the auto loans now this
is a great tool because we can look at
the purchase price and let's say we
bought the car for $30,000 or we're
gonna buy it for 30 you could put in all
the fees or rebates the trade-in values
and and the down payments we're just
gonna stick with the down payment
because we're not gonna have any of the
other fees for this example but let's
say that we put down $10,000 which would
mean that we're financing 20,000 so if
we come over here and we look at the
interest rate we put in our 3% we put in
our five years for the duration of the
loan we could see that the loan amount
was 20,000 our total interest is going
to be one thousand five hundred and
sixty two dollars bringing the total
cost of ownership up to 31 five 62 so if
we spent all this time negotiating what
the price is going to be and we decided
that it was going to be thirty thousand
dollars and the dealership agreed
they're actually making
more money now a side note whether or
not they make the money or the finance
company makes the money it doesn't
matter you're paying thirty one thousand
five hundred and sixty two so don't put
any comments in the bottom saying who's
making the money on the interest I don't
really care all I care about is how much
it's coming out of your pocket that's it
that's all we're gonna take a look at so
that's all that's it that's all we're
gonna take a look at so again if we have
thirty thousand now if you're sitting
there and saying wait a second I still
can't pay this three hundred and
fifty-nine $59 per month you can adjust
those those numbers right here now let's
say that you want to put you know eleven
thousand down and we hit this print
button we could figure out that our
payments going to drop the 341 but let's
say you still needed to come down
further well you can either negotiate
for it on the interest or on the total
price so if they're willing to come down
or if there's some way they can figure
out how to get you a lower interest rate
let's say that's two point five and we
hit print we can see that it comes down
to 337 so you can adjust these numbers
in real time right there at the
dealership so you know that they're not
playing any games now this isn't a video
about negotiating the car it's just
about knowing the math behind it and how
to calculate it and don't be afraid to
break out the financial calculator and
you can bring it to the dealership with
you so when they quote you you can't a
whether or not it's correct and if you
need to figure out how to adjust that
math you can do it for yourself and I
hope this has helped if you've enjoyed
this video be sure to subscribe and
leave your comments down at the bottom
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