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    Saturday, February 8, 2020

    If you are taking your car on loan, then some information about the loan

    If you are taking your car on loan, then some information about the loan

    if you don't understand that the interest works on your car loan then you're always gonna spend way more money than you need to and that's not something to be proud of I get a lot of questions asking how car interest works so in this  I'm gonna cover the basics so that you guys can at least understand how the math works and then what i actually want you to try to to is simply pass it on to somebody else so that they can learn the same information that I'm gonna pass on to you I  a while back but I really just wanted to give it an update 

    and that's why I'm making this one so that I can hone in on the basics and so that you guys can learn something new and pass it on to someone else like I said earlier now i if you're into that type of content but for now let's just start talking about car loan interest so I'll start by saying that car loan interest works the exact same way as an installment loan with a fixed-rate because that's exactly what a car loan is it's just a loan where you set the contract to a certain amount of time and the interest rate and then you just pay monthly until the loans paid off and that's it so if you've got a conventional mortgage or a personal loan those all work pretty much the exact same way too and as long as the loans are the same the math is always going to be really easy to do because once you understand how to do it you can do it on every single type of these loans as long as they're the same type of loan just make sure that your loan always has a fixed rate and not a variable one because a fixed-rate loan is always going to stay the same and your monthly payment is going to stay the same but if you have a variable rate that can actually change your monthly payment and that is not cool because the last thing you want to have happen is to be used to




    How to Use Car Loan Calculator

    sudden it goes up to 450 because your rate changed because you're on a stupid variable rate because that is not a good thing to do so the first car I bought when I was 20 years old actually had a variable rate of about 16 to 18 percent interest and then I paid every single fee that the dealer had because I was so ignorant when I was buying the car and now I'm just gonna teach you guys everything that I know so that you don't make the same mistakes that I did car loan interest can cost you way too much or it can actually be fair and that's all dependent on just how you set up the loan now with just some basic research I found that the average new car loan is actually for about thirty thousand dollars and then for used it's about $20,000 but in my opinion that's way too expensive because you're counting everyone in the entire country

     and that is just a really high car loan and then the average interest rate is about 7% and the average term is about 65 months which is really long and when you end up doing all the math for your car loan interest those are the three numbers that you're going to need you're gonna need the amount of the loan the interest rate and then how long you're paying it back which is the term now right now I'll teach you how to do the basic math so that you can get a rough estimate of how much you're paying on interest right now on your loan and then I'll go over the fancier stuff with the real math so let's pretend that you have a car loan for $25,000 with an interest rate of 7% and you want to know how much interest you're actually paying on it right this very second all you have to do here is put in 25,000 in your calculator and then times it by 7% which is point zero seven in your calculator now you're gonna end up with 1750 which is 1750 dollars that you're paying an interest per year on the amount that you owe immediately which is predicated off of 25 thousand dollars and then if you want to figure out how much interest you're paying per month just take 1750 and divide it by 12 which is gonna find yourself being a hundred an  and that is just a really high car loan and then the average interest rate is about 7% and the average term is about 65 months which is really long and when you end up doing all the math for your car loan interest those are the three numbers that you're going to need you're gonna need the amount of the loan the interest rate and then how long you're paying 



    If you are taking your car on loan, then some information about the loan
    FORMULA NEWS



    it back which is the term now right now I'll teach you how to do the basic math so that you can get a rough estimate of how much you're paying on interest right now on your loan and then I'll go over the fancier stuff with the real math so let's pretend that you have a car loan for $25,000 with an interest rate of 7% and you want to know how much interest you're actually paying on it right this very second all you have to do here is put in 25,000 in your calculator and then times it by 7% which is point zero seven in your calculator now  d forty six dollars per month that you're paying an interest right now on that loan now that's just a quick way to figure out how much interest you're paying right now but it's not a hundred percent accurate because you've got to understand that as you make monthly payments some of your money is going towards the principal or the balance and then some of the money is also going towards interest as well so as you make your payments every month and some of that money goes towards your principal you're gonna owe less which means you're actually going to pay less an interest because of it and if you can make extra payments towards your balance every month I would definitely do that because in the long run you're gonna end up paying off your loan faster and you're gonna pay less an interest which is just a win-win all because you're paying extra


     Loan calculator and you'll find 

    one it doesn't really matter which one you use because they all do the exact on your loan just make sure that the money you're using for your extra payments is actually going towards the principal because there's a lot of lenders out there that will just stick the money in a cash account if you don't specify it with them which i think is super dirty but they are doing do this so watch out for it and then some lenders will only let you make an extra payment if it's for the exact same amount or more as your monthly payment already is so for example if it's three hundred and seventy-five bucks a month and in order to do an X payment you're gonna have to come up with a minimum of 375 bucks so as for it to qualify with them which i think is super dirty but oh well that's the way that some lenders do it I've had a couple loans 

    that do this and it is a little bit annoying but what I've ended up doing is just saving up my extra payments until I have enough to qualify for it and then I just put it towards the loan and that's the end of it and I do it again and now I'm gonna teach you guys how to do the real math but you are gonna have to have what's called a loan calculator but you can find this on any app store or you can just Google same thing so just find one that you think looks decent and used that now right here we're gonna be messing with what's called the ammeter ization schedule which is basically just a math side of your loan and I can't do this without a loan calculator so I always need to do this and I can't do it on paper because I'm not that smart but this is how we're gonna do it and I'm gonna show you how to do it on my phone okay so this app is called loan calculator professional and I like it because you can do extra payment math on it but I'm sure the others can too now all you are doing is connect your loan amount which I'll set to $25,000 then just set the interest rate which I'll put it the average which was 7% and then I'll set it for five years which is sixty months because there's no such thing as a 65 month car loan now just make sure that you're set to monthly payments and then we won't do any extra payments for this example hit the calculate button and you can see right here 



    If you are taking your car on loan, then some information about the loan
    FORMULA NEWS



    that we're going to be paying 495 bucks a month for the next five years and we'll pay forty-seven hundred bucks in interest over the life of the loan now we'll click on the schedule and you can see exactly what you'll pay an interest by the month you can see right here that your first month is going to be about a hundred and forty six bucks an interest but if you scroll down you're gonna see that your interest is going to go down a little bit every single month because remember that as you pay down your loan you're gonna pay less an interest because you're only going to be paying on what you currently owe and that's all there is to it so just make sure that you make your monthly payments for your car every single month because as you pay down the loan you're gonna pay less in interest and that's just how the math works now go ahead and plug a bunch of different scenarios into the loan calculator so that you can see all the different prices and the terms based on what you set so that you can see what you can actually afford and just remember that you can use this loan calculator on all your difference as long as they're a fixed rate because as long as they're fixed then you're good to go and you can do the same math on all your different loans and then if you do

     make extra payments on your loan your schedule is gonna change but it's gonna be in a good way because remember you're always gonna pay off your loan faster and pay less an interest when you're paying extra and in my opinion I think the easiest way to pay extra on your cars is just to round up your monthly payment because you're probably not even gonna notice that in your budget so if you have a car payment of 475 bucks a month and that i would just round it up to five hundred bucks a month that way you're at least paying something extra on the car and it's not really gonna kill your budget but at least you're starting to pay a little bit extra and then on top of that if you can set your automatic payments

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