The car finance interest

One of the major things to think about when you want to consider a new car purchase is the car loan rate that is offered by the car loan company. It is important to compare the rates provided by different companies so that you can make your decision based on how comfortable you will are with the rates. A car loan rate is mainly affected by two things: the amount of money you wish to borrow and the length of time that you will take to offset the loan. Although these seem usual points to think of before choosing car loan rates, the process of calculating how much you should apply for and the repayments that you will pay can be a daunting task. When choosing a car loan rate, there are additional items you may want to consider adding to the car loan. For instance, you may want the comprehensive car insurance, warranties for mechanical breakdowns that the car may encounter, costs incurred on the road and taxes, among others included in the rate.

The lending firm will have to approve this motor finance proposal. If it passes through, don’t forget that you will still have to borrow the money over the same period as stipulated in the car loan agreement. New cars sometimes attract lower car loan rates compared to used car finance. Also, the rates differ for secured loans and personal unsecured loans. Personal unsecured loans are charged much higher interest rates than secured loans. If you decide to go for the secured loans due to their lower rates, you have to have enough money to pay for the car’s insurance, and you will also have to offset the loan if you sell your car. Some lenders do not offer finance for vehicles that are over 7 years, though. The normal repayment period for the auto loan is usually between 5 to 7 years for most lenders.

The car finance interest rates that you choose may also be determined by where you intend to get your car from. Not many lenders lend against imported used cars on secured car loans, or they have a very rigorous process for those applying financing for such. In such a case, getting a personal unsecured loan may be the best alternative. When it’s time to choose a car loans rates, you have to be patient and do wide research. The bank or car loans companies may not be the best option.

This is because they usually come up with their interest rates based on different factors. For example, some institutions may price the loan based on the age of the car, while others may have low car finance interest rates based on the strength of the application. If you are not an ace in doing the legwork or researching on the rates offered by different bank car loans and finance company products, you can employ the services of a good car loan broker. A loan broker who is knowledgeable in motor finance options and the prevailing rates at the market may ease your work and make your rate selection much easier. He should be able to compare the car loan rates and recommend different options that are best for you. Therefore, choosing a good car loan broker may also be a determining factor on whether your quest for purchasing a car will be fruitful or not. Also, they are the people who can recommend you the best financiers or institutions to work with based on their terms of the contract.

Therefore it is important to compare different car finance rates available in the market before settling for one. You have to select a rate that you will be comfortable with, that is one that offers you a repayment period and terms that you can work with. A good car broker can be a vital stepping stone that will enable you get a good car loan rate deal. Example No. 1 (Volkswagen)

As seen in the below graphs, Loan 1 and Loan 2 has a monthly payment of $628.78 and $483.37 respectively whereas Loan 1 is higher by $145.41 per month. Total interest for Loan 1 and Loan 2 is $311.11 and $876.76 which means Loan 1 will cost $565.64 less than Loan 2 therefore Loan 1 should be preferred over Loan 2.