Car Loan Payments - Financing Scenarios
Small changes in the terms of a financing contract on a new purchase can provide huge savings in time and money. The following car loan example illustrates the benefits of running several financing scenarios before purchase, so the optimized choice is made.

Lower payments, longer loan
% Interest Payment Years Principal Interest
3.99% $199 6 $12,723 $1,605
7.99% $199 6 $11,353 $2,975
9.99% $199 6 $10,745 $3,583
14.99% $199 6 $9,414 $4,914
Most you can finance under these terms is $12,723


Higher payments, shorter loan
% Interest Payment Years Principal Interest
3.99% $349 4 $15,460 $1,292
7.99% $349 4 $14,708 $2,525
9.99% $349 4 $14,157 $3,075
14.99% $349 4 $12,903 $4,330
Most you can finance under these terms is $15,460


Medium payments, medium loan
% Interest Payment Years Principal Interest
3.99% $274 5 $14,883 $1,558
7.99% $274 5 $13,516 $2,925
9.99% $274 5 $12,899 $3,541
14.99% $274 5 $11,520 $4,920
Most you can finance under these terms is $14,883


Higher payments, longer loan
% Interest Payment Years Principal Interest
3.99% $349 6 $22,314 $2,814
7.99% $349 6 $19,914 $5,217
9.99% $349 6 $18,845 $6,284
14.99% $349 6 $16,509 $8,619
Most you can finance under these terms is $22,314


Different payments, same interest rate
% Interest Payment Years Principal Interest
4.99% $199 6 $12,360 $1,968
4.99% $249 6 $15,467 $2,463
4.99% $299 6 $18,573 $2,957
4.99% $349 6 $21,677 $3,451
4.99% $399 6 $24,783 $3,946
4.99% $499 6 $30,993 $4,935
Each $50 payment increase buys $3,100 more car


 

Typically, people pre-determine the amount they can affort each month for their car payment. You can use Debt Reduction Calculator to change the interest rate and loan length, while keeping the monthly payment constant, with the objective to minimize overall costs.