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In the process of shopping for a car? You have a lot of decisions to make.

When most of us think of car shopping, the first thing that comes to mind all of those choices of automobiles we have ready to us. There are so many makes and models to pick from, it can be hard to know where to begin. And, even once you have a type of car in mind, you have to reconsider the color and all of the discrete options: do you want satellite radio? Do you prefer the bigger motor or the more fuel-efficient one? Sunroof, anyone?

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However, if you are car shopping, there is other major selection that you will have to make that goes beyond the particular car you finally choose. That selection is: how much are you willing to spend?

The answer to this demand will have very important ramifications for how much money you have to borrow in order to buy the car you want. And, of course, that will settle how big your car payments will be. Buying a car is all the time going to be a balancing act between getting just the car you all the time wanted and being able to afford the monthly payments.

If you are seeing for an auto financing calculator, here is how to theorize your car payments yourself in 3 easy steps:

1. Make positive assumptions about vehicle cost, amount of your down payment, and the interest rate you will be paying:

There are just a handful of factors that will settle how much your car payments will be. Prepare for your calculation by manufacture 4 important assumptions about your upcoming auto-purchasing process:

a. What will be the total sales price of the car?

b. How much money are you able to put down on the car at purchase?

c. What is your staggering interest rate? Let's call this "r".

d. Over how many months do you plan to pay down the loan? Let's call this "m".

Now, subtract "b" from "c" to frame out how much money you will need to borrow. Let's call this "P" (for principal).

2. theorize your car payment using this formula:

Here is the method for calculating your car new payment:

P (r / 12) / (1 - (1 + r / 12) - m )

As an example, let's assume that your assumptions above were as follows:

P = principal, or amount you will borrow = ,000

r = loan interest rate = 0.08

m = 48 months

To theorize your car payment given the above-mentioned assumptions, plug in the variables so that your method becomes:

12000 (0.08 / 12) / (1 - (1 + 0.08 / 12) - 48 )

The correct answer in this case is: 2.96.

3. Now, go back to step 1 and try a different set of assumptions:

That's it! Now, depending upon whether you can afford that monthly payment amount or not, go back to Step 1 and try a different interest rate or loan amount and try it again.

Hint: you can verily do this calculation with a financial calculator, but using Ms Excel may be one of the most favorable ways to do it since it allows you to plug in different possibilities and assess the results.

Auto Financing Calculator method - How To infer Your Car payment In 3 Steps