Those Dealership Calculators Lie

…and what you should do instead.

If you’ve spent any time online looking for cars, chances are you’ve seen those online payment calculators; plug in your loan amount,interest rate,down payment, trade-in, and *ping* you get your estimated monthly payment. Pretty cool, huh? Finally, a payment you can live with.


Um, they forgot something. Taxes, title, and registration fees. In most cases, unless you are coming in with a sizeable down payment, you need to calcuate your estimated payment down to the penny (well, as close as an estimated payment can get).

Here is are the same perimeters, this time with taxes, title, and registration fees:


Next, plug in your down payment, if any:


Next, select your loan term and interest rate:


Sure, it adds up to a paltry $17.00 a month difference, but if you’re on a tight budget, $17.00 can mean the difference between some extra veggies/fruits in your shopping cart or skipping them altogether and grabbing some cereal or mac and cheese instead. For many of us, it could mean the difference between being in the hole each month or still being able to pay toward your kid’s lunches.

I learned this the hard way. I’ve been car-shopping. My city is cutting transit service to the bare bones soon and I need to be able to get around. I was fortunate enough to get approved for a car loan at a decent rate, thanks to a pay raise.

I found I car I really liked, crunched some numbers using the dealer’s online calculator, test drove the car, fell in love, called my insurance agent to get a quote, and started picturing what life with a car was going to be like…finally.

Fortunately, I had enough presence of mind to tell the salesman I will be going home to sleep on it. I needed to get my wits about me, get the new-to-me car smell out of my nostrils, and do some deep thinking. And number-crunching.

I had been stalking, er, I mean, reading for awhile now (no affiliation) and headed over to their payment calculator. I plugged in the sales price of the car. Following their screens, I also plugged in taxes and DMV fees (those vary by state).

Big surprise. The difference in payment was enough to rule out getting that particular car. Since it was a no-haggle pricing policy, I was hosed in terms of negotiating a deal.

Lesson learned.

Why I didn’t do that in the very beginning escapes me, but it shouldn’t escape you. Always take into consideration the sales price, your down payment, if any, your trade-in, if any, along with your actual interest rate, selected loan term, and those pesky taxes and DMV fees.

You will save yourself a rude awakening and will be able to budget more accurately and see if the payment will fit into your overall household budget every month. You may even have some additional leverage in negotiating your out-the-door price with the dealer.

Either way, do as I say, not as I do 😉

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