How Do I Calculate Car Loan Repayments?
What to know when using a car loan calculator
Choosing the right car loan is easier if you can compare the cost of your different car loan options. One way that you can do this is to compare car loans using a car loan calculator.
With a few key pieces of information, you can calculate your potential car loan repayments to find an optimal solution to finance your next car.
Car loan terms to know
Loan Amount: This is the dollar amount you borrow to buy your car.
Loan Term: The period over which you will repay the car loan.
Interest: The fee charged by the lender for lending you money. Sometimes a higher interest rate comes with greater flexibility and more features, providing better value for money to particular borrowers.
Repayment frequency: When you make smaller payments more often, you might reduce the total interest paid over the car loan term.
Balloon or residual payment: This is a lump sum payment that falls due at the end of the loan term. You can choose to pay the lump sum or refinance the residual value at this stage.
Choosing the right type of car loan
Choosing the right car loan can be tricky.
The best place to start is by identifying what you'll use the car for. Is purely for personal use, or will you sometimes use your car for work?
If you do use your car for work, you might consider a chattel mortgage. You'll not only get lower business car loan interest rates compared to if you'd chosen a personal loan, but you'll benefit at tax time too.
For PAYG employees, a novated lease could be a smart way to save on tax by purchasing your car using pre-tax savings.
You can also choose a personal secured or unsecured car loan. The advantage of an unsecured loan is that you can use it to purchase a car that's more than seven years old, but you will pay a higher interest rate.
Calculating my car loan repayments
Calculating what your repayments allows you to compare the costs of different car loans and determine how your new car loan will affect your weekly finances.
With an idea of the purchase price of your next car, and how long you'd like to repay the loan over, you can get an estimate of your weekly, fortnightly or monthly repayments using our car loan calculator.*
Make adjustments to your purchase price or loan amount and loan term to find a repayment figure that fits within your budget comfortably. If you have an idea of how long you want to own the car, try to ensure your car loan isn't longer.
*Remember that a car loan calculator is just a guide, your actual car loan repayments may vary.
Consider car insurance
A requirement of a secured car loan is that you have adequate comprehensive insurance in place to cover the costs of an accident.
You can arrange car insurance through your preferred partner, or speak to your lending manager to get a competitive, comprehensive car insurance quote and find out how your insurance can be bundled into your car loan repayments.
Car Loan Calculator Case Study
Sarah is looking for a car loan but isn't sure what kind of car she will be able to afford. She'd like to get a brand new car to drive to work and out to visit her parents in the country on the weekend, and Bluetooth connectivity is a must.
Sarah knows that she has about $230 a week to spare, but she still wants to keep saving, so she's willing to spend $180 per week on her new car.
Using the car loan repayments calculator, she works out that she can spend up to $30,000 over a four-year loan term.
How much can I borrow for my car loan?
The amount that you can borrow will depend on how much you can afford to repay. To work out your maximum loan amount, you need to look at how much income you are saving each pay cycle.
You'll need your payslips, bank statements and any credit card or other loan statements to work out what your surplus income is. When you get a personalised car loan quote with a lending manager, we'll do all the calculations for you and let you know what your borrowing options may be.
To get a car loan, you do need to show that you are spending less than you earn, and that you can repay the loan amount on time.
How do I apply for a personal car loan quote?
You can apply for a car loan quote right from your phone. You'll need ID, proof of income, and information about your assets and liabilities.
When you start an application, your lending manager will collect your financial information through SMS or email, and prepare an obligation free car loan quote, so you know exactly where you stand.
When you choose a car loan broker, they can advise you on the optimal car loan options to fit your circumstances. If you've already used the car loan calculator to work out what you can afford in repayments, this will make the process quicker too.