Using a Finance Calculator

As web-based services continue to expand, an increasing number of companies are taking advantage of the technology and providing online finance calculators on their websites. These are a great resource and tool for people seeking car and truck loans. But users must be aware of how to use this tool properly and of its constraints in order to fully appreciate the benefits.

Key advantages of a finance calculator include:

  • Give buyers an indication, a rough estimate or ballpark, of what their monthly repayments may be on various car and truck purchases based on a price, interest rate and other elements.
  • Although the result calculated is only an estimate, it gives buyers an indication of whether or not that particular vehicle is within their budget.
  • Allows you to see the difference in repayments between different valued vehicles.
  • Assist with decision-making as to which vehicle to purchase where repayments are a key consideration.
  • Assist with planning how to structure your loan, eg over how many years.
  • Easily see how the term of a loan can vary the monthly repayment.
  • Provide clarification in regard to finances, eg if you are in a position to proceed with a vehicle purchase right now, if you should save a larger deposit or allocate funds to a larger deposit to reduce monthly repayments.
  • Provide confidence to proceed with the sale or in making further enquiries, in the knowledge that the repayments are within expectations.

How do finance calculators work?

  • Most online car and truck finance calculators are easy to use and accessible from most devices with an internet connection.
  • They are set out in a relatively universal online form format, with boxes, known as fields, indicating where to enter what data.
  • The amount of the loan is entered. This may be 100% of the purchase price, the purchase price less any deposit or trade-in the buyer chooses to pay, the purchase price plus an allowance for dealer charges, on-road costs and other costs associated with the purchase.
  • The term of the loan is entered in either years or months. This is the amount of time requested to repay the loan.
  • The interest rate is entered. The website usually displays the interest rate for car and truck loans being offered by that company.
  • A balloon or residual payment is included as an option for some types of finance. If required, this is entered.
  • Some calculators may ask for additional information.
  • Once all fields are completed and all essential information entered, the result can be calculated.
  • The amount displayed on the screen is the estimated repayment amount based on the values entered.

Varying any of the amounts entered, ie interest rate, loan term, loan amount or balloon, will change the repayment estimate.

What should you consider?

Online finance calculators are a broad-based, all-purpose device and do not have the functionality to take into account a number of variables associated with individual loan applications. Any fees and charges applied by individual lenders are not accounted for. Issues specific to your individual application are not allowed for and these may change the repayment level – it may be higher or lower. Interest rates may vary between the time you use the calculator and when you apply for your loan.

The calculator result does not indicate any offer of a loan or approval of your application. Reading the disclaimer for that calculator should outline these issues.

Car and truck finance calculators are a great tool to assist with your purchase decisions. If you would like to try one, we can direct you to a finance calculator.