How much will my monthly car payment be?

If you're financing all or some part of your new car's cost, and you want to calculate your monthly payment in advance, you will need to know the amount you are financing, the interest rate, and the loan term (i.e., the number of months to full repayment). If you have these three numbers, an inexpensive financial calculator can give you the amount of your payments. You can also get the information from the automobile dealer or your own bank. You can even search the Internet for any of the websites that feature automobile payment calculators.

It is important to remember that the amount you are financing may include taxes, title and registration fees, delivery charges, and add-ons such as extended warranties, service agreements, and credit life insurance. The simplest ways to minimize the amount you are financing are to increase your down payment, shop around for a lower interest rate, or waive optional add-ons. Minimizing the amount you are financing will also minimize your monthly payment. However, be aware that extended terms of up to 72 months are often available when larger amounts are financed, whereas you may only qualify for 48-month financing with a smaller loan. You will usually pay a higher interest rate to get extended terms, but the additional months should lower your payment. Consider this carefully. Six years of payments may outlast the value of your car, and you will pay an additional two years of interest charges.

If you decide to lease a car, your monthly payment may be lower than if you purchased the same vehicle with a minimal down payment. With a lease, you aren't buying the car--you're paying only for the depreciation of the car's value over the period that you plan to use it (plus a lease fee). It is a little more difficult to estimate the monthly payment for a lease because it's based on the car's expected depreciation over the lease term. That amount varies, depending on the make and model of the automobile. However, several Internet sites provide lease calculators to estimate your lease payments. You can also ask the car dealership (or lease company) to quote you a payment amount.