Everything you need to know about Car Loan Interest Rate

• Car Finance,
• Aug 30, 2019

 

With the increase in the prices of the automobile industry, the people have started resorting towards brokers and lenders to get a car loan. Many of the people get into confusion about which car loan to get and end up paying more than they generally have to. Lowest car loan rates can make a huge difference but can also end up scamming you and trick you into getting a car loan with the highest comparison rate.

To avoid this confusion, here is a list of everything you need to know about the car loan interest rate!

 

1. Car Loan Interest Rate is not the same as a Comparison Rate!

2. This is one of the most crucial things to know whenever you are considering to apply for a car loan. The car loan interest rate is way different than a car loan comparison rate. Even the best car loans in your opinion offering lowest car loan rates might actually be leeching money off you in a way that you would not even be able to complain about or take legal action.

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4. Back in 2003, the Australian Government introduced Comparison Rate to avoid people being tricked into taking these high-priced loans. The comparison rate tells you the exact price of car loan repayments by taking the accompanying fees and additional charges into account along with the compulsory interest rate. In this way, you can know more about the interest rates of a certain car loan package by taking a look at its comparison rate and find out whether that car finance is actually low in its interest rate or not.

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6. You can learn more about the comparison rate here.

 

2. What does Interest Rate depend upon?

2. The car loan interest rate is not the same for everyone. There are a lot of factors that contribute to the making and breaking of the interest rate. It varies from person to person, and never stays the same. Some lenders or brokers even change the interest rate amidst the term of the agreement.

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2. The most common factors upon which the car loan interest rate depends upon are as follows:

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•  1- The Lender/Broker: Your lender or broker may have different interest rates than some other lender or broker, so it is always a good practice to check different lenders and compare both the interest rates and comparison rates to know the most about both the dealers.

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•  2- Type of Vehicle: The type of vehicle you are going to purchase has a huge impact on your interest rate. Naturally, a sports car would hold much more value than a regular vehicle. So, watch out what you desire for, it may end up costing you even more. If you want to learn about which car is best suited for you, check this article out!

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•  3- Financial Status of the Customer: Your financial status can have its toll on you too. If you have a good credit score, you may end up paying more since the lenders know you can afford that. Be wary of that.

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•  4- Car Loan Amount & Term Duration: The car loan amount has an impact on your interest rate. It might occur that the greater amount of loan results in a greater interest rate over a longer-term. However, it can also result in a lesser term duration with lesser interest rate. It is all explained in the agreement you are presented with when you sign a contract for the loan.

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•  5- Type of Loan: The type of car loan can also severely impact the interest rate of a loan. If you are looking for the lowest car loan rates or car finance with low interest rates, you might need to look at the secured car loan and learn more about them. A secured auto loan is usually low interest but keep your car as security in case you fail to make the repayment before the deadline.

 

3. Increase in Interest Rate:

3. As briefly hinted towards before, the interest rate can actually increase amidst the term of the agreement. This needs to be carefully analyzed and ensured that the broker or lender you are getting the loan from is not doing anything like this. They usually give you an extended period of time for repayments where the car loan repayment amount is small but the interest rate gets higher after each agreed term.

 

4. Is Car Loan Interest Rate the only thing to look out for?

4. Of course not! An interest rate of a car loan is not the only thing you should consider when deciding which package to get. There are tons of other factors to be brought to your mind before you jump towards the decision-making step. As mentioned in the 2nd point, your interest rate depends on several factors. The lowest car loan interest rate is not always the way to go. You should always take a look at:

 

•  1- Term of the loan

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•  2- Recurrence of repayment

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•  3- Type of car loan

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•  4- Extra fees and potential charges

 

While taking these points into consideration, you should know that different combinations of these factors can result in a different output. So, beware of what you are looking for, but always select the best car loan package suited for you!

 

5. Anything else?

5. That is pretty much it! By now, you should have enough information about the car loan interest rate and should be able to figure out the best loan package for you. However, it is always better to consult the experts before making a huge decision. Do your research and find out the best car loan brokers or lenders in your area and compare their comparison rates to find out the best car loans out there.

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5. When you are done with that, good luck with your loan application and once you get your desired loan, do not forget to get the best-suited car for you. Before getting the car, however, make sure to run background checks on it. QuickREVs performs background checks, VIN number checks, car history check, and plenty of other services online!