When looking for cars for sale, many buyers make the mistake of focusing on the list price. However, multiple factors impact the final monthly payment amount. As such, finding an option that fits into your budget requires considering these aspects. Here's a closer look at three elements that play into the cost. 

What Factors Impact Car Payment Total?

1. Loan Amount

A primary impact of monthly costs is the total amount borrowed. In most cases, the car loan includes the cost of the new vehicle as well as any fees, extra warranties, and gap insurance, if needed, but minus the down payment. It can also include any amount rolled over from the previous car's loan if the trade-in price didn't cover what was owed. In some areas, it's also possible to include sales tax in the loan so that you don't end up facing upfront out-of-pocket costs. 

To determine the real loan amount, ask the car dealership for an itemized cost breakdown. This document outlines what's included in the purchase and the total amount for each line item. These details can help you evaluate what list price fits your budget based on the total cost of the final sale. 

2. Interest Rate

Every monthly payment covers a portion of the principal part of the loan as well as the accrued interest. The interest rate you end up with can significantly change the final payment amount. For example, a 48 month payback for a $15,000 loan at 3% interest is roughly $332 per month. The same arrangement with a 7% interest rate bumps up the cost to $359. 

As such, scoring a lower rate is key to achieving a lower payment. Interest rates are largely based on credit scores. As such, try to maintain or improve your score in the lead up to buying a car by making all other payments on time, not taking out new lines of credit, and reducing overall debt. 

3. Length of Loan

Auto loans are available in a range of term lengths, ranging from 12 to 84 months. Longer terms stretch out the repayment, which lowers the monthly cost. Shorter-term arrangements result in a high payment, but drivers usually end up paying less in interest over the life of the loan. 

To decide the right option for you, evaluate your goals when shopping for cars for sale. If lower payments are a priority, then a longer term is a good match. Alternatively, if you want to save money overall, then a shorter length may be the best bet if the high repayment fits your budget. 

Find quality, dependable vehicles in your budget at Discount Auto Sales in Mountain Home, AR. Drivers across Baxter County and the southern Ozark Mountains rely on the local used car dealership for a wide inventory of cars, vans, and SUVs at competitive prices. Browse their affordable cars for sale online, and schedule a test drive today at (870) 425-1775.