Car loan repayment calculator

Are you thinking about taking out a loan to help you buy your next car? If you are starting to test the waters of car finance, you might have come across a few bits of terminology that seem a little confusing.

If you’ve bought a car in the past few years, you might have taken out a car loan to do so. But while the loan you took at the time may have been appropriate then, your circumstances might have changed, or you might just be wondering whether there are better options.

Need a loan for your new set of wheels? Here at better™, we’re all about helping Kiwis finding the right vehicle finance solutions for their needs. But with so many different options available, how do you find ‘the one’? Here are some key features and benefits you need to look at. Interest rates The interest rate is one of the most critical factors to consider when comparing car loans. Not only it can have a significant impact on your monthly repayments, but depending on how long a term you choose, it will determine how much you’ll pay in interest overall. Interest rates can vary widely from provider to provider, and also depending on your credit score. The lower the better, of course. But it’s not the only thing that matters when choosing car finance, which brings us to the next key feature… Loan term The loan term is the length of time over which the loan is to be repaid. Generally, all other factors being equal, the longer the loan term, the smaller your monthly payments will be. But you’ll end up paying more in interest in the long run. On the other hand, a shorter loan may mean larger monthly repayments, but you will pay less interest compared to a longer term in the long run. As you can see, when comparing car loans, it’s crucial to find a balance between interest rates and loan terms that works for your financial goals and budget. But this is not all. Repayment flexibility Besides choosing the shortest loan term that you can afford, you may also want a car loan option that allows you to pay off your loan faster. Some (but not all) car loans offer flexibility in repayment: you can make extra payments or pay off the loan before the scheduled due date, without being charged an early repayment fee. This can come in handy if you expect to receive a windfall or simply want the freedom to pay off the loan sooner than anticipated. Payment frequency Payment frequency refers to how often you will make payments on your car loan – be that weekly, fortnightly, or monthly. It’s a good idea to choose a payment frequency that aligns with your income and expenses. For example, if you get paid every fortnight, it may be easier to budget for fortnightly car loan payments. By considering your circumstances and the flexibility you’re looking for, you can find an option that is cost-effective and aligns with your financial goals. Fees and charges Here’s another important thing to check before signing on the dotted line: the fees and charges associated with the loan. Depending on the lender, there might be establishment fees, early repayment fees, and late payment fees. So, make sure you read the fine print, as these charges can affect the overall cost of your loan and even limit your freedom to pay off the loan as soon as you’d like. Loan amount It may sound obvious, but the loan amount you can obtain is another critical feature to consider. Once again, the maximum amount you can borrow depends on the lender as well as your financial circumstances (what you can afford to repay). Plus, there may also be a minimum borrowing amount. Secured and unsecured loans Secured or unsecured? You may have heard these terms before. Simply put, secured loans are loans that are backed by collateral, like your car. So, if you default on your secured loan, the lender can repossess your car to recoup the losses. Unsecured loans, on the other hand, don’t require collateral but often have higher interest rates compared to secured loans. Whether one or the other is for you depends on your unique situation and risk tolerance. In some cases, a secured loan may be a good option due to the potentially lower interest rates. Looking for your next car loan? You’re in the right place. The team at better™ can help you explore your options: simply get in touch and we'll be happy to assist you. Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.