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Buying a Car: What It Really Costs with Finance Charges

Buying a Car: What It Really Costs with Finance Charges


Buying a car: what it really costs with
finance charges. There’s a lot to know when buying a car.
you will learn how to calculate monthly payments and how to understand finance
charges in the annual percentage rate or APR. So you’ve decided to buy a new car. you
don’t have enough cash to buy that car so you know you will need to borrow
money to do so. anytime you borrow money to buy a car.
you will have to pay finance charges on that money. the more money put down on
the car, the less the loan will be. a money wise decision would be to save as
much as possible to put towards purchasing a new car
thus your loan would be smaller and you would pay less in finance charges.
it is important to know your rights as a consumer
the truth-in-lending law states that car dealers who lend money must tell the
borrower’s the amount or rate of the finance charges. this rate is called the
annual percentage rate the annual percentage rate is already
figured into monthly payments and the down payment so let’s consider a few cars
the first car you decide to look at is a new sedan. the monthly payment is 225 dollars for
60 months with $2,500 down the tax and registration fee would be five hundred
and seventy three dollars and sixty cents and the APR is twelve point ten
percent given that information you can figure out the total cost of the car if
you take out the loan for 60 months car dealers will often give a customer a
reduced price if the buyer pays cash for the car
for this sedan if you paid cash with no loan you could buy this car for twelve
thousand five hundred and ninety five dollars plus tax and registration so the
car if paid for with cash would cost $13,168.60 Now that you know the price of the car if you paid cash and the price if you
took out a 60 month loan, you can easily calculate what you are paying for the
loan. subtract the smaller price from the larger one your answer will be the cost
of the loan so the interest cost is three thousand
four hundred and five dollars you decide to look at one more car this
time you’re considering a sports car this car is 255 dollars per month for 60
months with $3,000 down the tax and registration fee would be five hundred
and seventy three dollars and sixty cents and the APR is twelve point ten
percent knowing this information calculate the total cost of the car. if
you choose to take out the sixty month loan,
the sports car would cost 14,500 dollars plus tax and registration. if you paid
cash for the car figure out what the loan is costing you for this car. You have now completed the learning
object, buying a car: what it really costs with finance charges.

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