How to use a hire purchase calculator

A hire purchase is when you take out a car on finance through a dealership. You need to put down a deposit and make regular monthly payments before you actually own the car. You may want to know how much you can afford to borrow and what you will be spending each month, which is when you will need to use a finance calculator. However, it is important to note that this is only an estimate.

The total cost of the car

You will need to decide on the total cost of the car. This will include all taxes and extra costs that you have. You may need to include your insurance into this total amount.

Your downpayment

You can take off the deposit from the total, since they will not be included in your car finance quote. You will usually need 10 to 20 percent of the total cost as your deposit.

Your interest rates

When using the hire purchase calculator, you will need to include the car finance interest rates. You will sometimes find that the rates are locked in but there are times that you can find that they constantly change. It all depends on the type of finance option you take. This will be something that you need to ask the dealer about and will also be the reason for the amount on the car financing calculator to be an estimate.

Is there an interest free period?

Some stores will have a period which is interest free. This is someting to take advantage off because it will mean your total amount in the end will be much lower. This can be a little difficult to add onto the calculor.

What is the term of your payment schedule?

This is the length of time that you will be taking the hire purchase finance out for. You will need to add this onto the calculator so that you can work out the total amount over the period of the loan. This can be changed if you do not like the total or the monthly payments that are calculated in the end.

Press calculate

This will tell you the total amount that you will end up paying with the interest rates and also the monthly payments that you will need to make. Remember that this could be an estimate, unless you have interest which is locked in for the duration of the term.