![]() Calculate the amount of money you need to borrow.Estimate the amount of money you will get for your old car.To calculate the monthly payments, we need to stick to the following steps: The sales tax in your state is 10%, and the interest rate on the car loan is 4%. You also have a car – an old Chevrolet Silverado worth about $7,000, and $1,500 in your saving account. Now we know the formula used in the car loan payment, we can try to perform a sample calculation.įirstly, let's assume that you want to buy a five-year-old Jeep Wrangler worth $20,000. Usually, it is more profitable to buy a new car with dealership financing, as it is significantly cheaper – interest rates in such loans can be as low as 0.5%, 1%, or 1.5%. Note that to promote sales, car manufacturers offer attractive financing opportunities via dealers. In dealership financing, you usually cannot choose the lending institution – usually, the loan is granted by so-called captive lenders associated with a car manufacturer. ![]()
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