![]() Because the more complicated the process, the more they can charge you. Sound confusing? That’s exactly what car dealers and lenders want. The number of months it will take you to pay off the loan (aka the loan term).The total amount of the loan (the principal).Any trade-in value you have from a previous car.When you finance a car, calculating your car payment comes down to several things: A car note (aka a car payment) is what you pay each month for that loan. You’re borrowing money and telling the lender that you promise to pay back the amount they loaned you (plus interest) within a certain time frame. ![]() But here’s how it works: When you finance a car, you don’t actually own the car. What’s a car note? Well, most people just call it a car payment. Next thing you know, you’re walking into the dealership, shaking hands with Billy Bob, and securing yourself a brand-new ride. So, you do what most people do-you finance it. You start seeing that car everywhere-in your dreams, on your drive to work, and even parked in front of your favorite coffee shop.īut you don’t have thousands of dollars lying around. Let’s say you have your eye on a brand-new car, one that you really, really want. Let’s talk about how car payments actually work-and what your options really are (yes, there’s more than one) before you get behind the wheel. But are they just a way of life, like filing your taxes and doing your laundry? Spoiler alert: They’re not. You’ve probably heard that before, right? Or maybe you’ve said it to yourself-to justify getting that shiny, new car.
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