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An Auto Loan Calculator makes finding that “right price” easy. Just follow the simple instructions.

An auto loan calculator deternimes the monthly car payment by a “money factor,” which is similar to the interest rate paid on a conventional loan but expressed as a difficult-to-understand fraction.

To convert a money factor to a recognizable interest rate, multiply it by 24. For example, a money factor of .00345 would be equivalent to roughly 8.3 percent interest. The money factor determines how much you pay the finance company each month for the privilege of driving that car.

In a lease, a person pays the difference between what cars are worth today and what they are expected to be worth at the lease’s end, plus a monthly fee to the finance company.

A consumer brochure on leasing, available online from the Federal Reserve Board, will explain much more. Changes in the Federal Trade Commission’s rules on advertising consumer leases are summarized in this online brochure.

In leasing language, today’s value is called the “capitalized cost”. Tomorrow’s value is called the “residual value”. The lower the capitalized cost and the higher the residual value, the better the deal is for the consumer.

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