How do I calculate the total cost of borrowing including interest and fees for a used car loan?

When working out the complete borrowing costs of a used car loan, it is important to remember that pricing starts with the rate. First, see what is the principal or amount you will be borrowing. Next, you must arrive at total interest payable based on the interest rate and the length of time for the loan to run. An EMI calculator is useful for estimating how much you will pay each month along with the total interest over the life of the loan.

You also need to include additional charges like processing fees, documentation charges, and administrative costs. Additionally, there may also be prepayment or foreclosure charges if you decide to prepay the loan. If your insurance premium is part of the loan, add this to your calculations.

To get a clear picture, sum up the following:

• Principal loan amount
• Total interest payable over the term
• Processing/documentation charges
• Prepayment/foreclosure charges (if applicable)
• Insurance/other bundle
• Late payment penalties (if applicable)

By adding up these costs, you will know exactly what you will pay in total costs of your loan. Always read the used car loan agreement in detail, and ask for a breakdown of all the costs from your lender before signing. With this method, you will know what you will be comparing, and be better informed to make the most economical decision for you.