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How to Calculate Your Car Payment

Updated: Jun 6, 2020

This article is about Calculating Car Payments the Easy Way

Your car breaks down. It’s either too expensive to get fixed or too old to get repaired. You don’t have the cash to buy a new car, but you need a car for your daily routine.

What do you do when your funds are low and your needs are high? You finance it.

When to Finance

Even if you don’t believe in borrowing money, you should consider it in a case like this. For many people, owning a car is the only way they can get back and forth to work or school. If you need a car for your daily routines, making a decision to fund it should be easy. Borrowing money to finance a car is like owning an insurance policy—it’s indispensable when you need it.

Can’t Get a Traditional Car Loan?

Worried about your credit? If your credit score is not strong enough to get traditional financing, then dealer or in-house financing may be right for you.

Advertised as “buy here, pay here” or “in-house financing,” dealerships that provide this service may offer more flexible payment arrangements if you have poor credit. Dealer financing is an arrangement in which a dealer finances your vehicle at the car lot. You’ll have to make regular monthly or bimonthly car payments at the lot.

Is Dealer Financing Safe?

Consumers have protection because dealerships face regulations from both the federal and state governments, according to the Dealer Business Journal. This protects against such things as high interest rates or being charged exorbitant late fees. To provide consumers with adequate disclosure and financing terms, dealers must adhere to the Truth in Lending Act, notes the FTC. State laws vary, so you should check your individual state’s website to get a better understanding of your rights and protections.

Dealer financing may cost more in interest and fees, but at least you’ll drive home with a car.

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