Finance Tools 101: Car Loan Payment Calculator

At Serra Honda of Champaign, we want you to be armed with all the knowledge you can find on what to expect when looking into car loans. Today, we’re looking at how car loan payments are calculated and the different factors that will affect the overall price.   

Car Payment Options 

There are two main routes for financing a new or pre-owned car: direct lending or dealership financing. With direct lending, you as the buyer borrow money from a bank, credit union, or financial company. Dealership financing means the dealership will be financing the purchase.   

Both options have their advantages, but which one is best for you will depend on your needs. With direct lending, you can get pre-approved credit terms which can help you negotiate with dealers. If you finance through a dealership, you could have a wider variety of options that can be adapted to your situation.  

How Are Loan Payments Calculated? 

No matter which financing route you choose, you will end up with the following:  

• Vehicle price 
• Interest rate 
• Loan term 

These are the main factors that determine your loan payments. The interest rate is generally set by the financer, but there might be room to negotiate. The loan term refers to the length of the loan, such as 36, 54, or 72 months. The longer your term is, the lower your monthly payments will be. Other aspects of the deal will inform this final payment amount as well, such as the trade-in value of your previous vehicle and the down payment amount you can afford at signing.  

Contact our finance department at Serra Honda of Champaign and let us help you find the right deal for you!