Getting a loan to buy your new car is, you would probably think, straightforward. However, there are a few apparently small variations which can be actually cost you a lot of money. So, it is worthwhile checking any loan offer, including the small print, for details that may distinguish the desirability of one loan over another.
In the US, about 90% of all auto loan offers are based on simple interest. A simple interest loan means that the interest is computed only on the original principal of the loan. There are some lenders who are offering loans which are not simple interest. It is best never to agree to an auto loan that is not a simple interest loan.
Another thing to bear in mind when considering an auto loan is pre-payment penalties. If such a penalty is built into the loan contract, the lender will penalize you, by charging a fee, if you pay the loan off early, whether through refinancing or by any other means.
So, if you think it is likely you will want to refinance at some time during the life of the car loan, this is clearly an important consideration. Remember, it is always easiest and least costly, when refinancing a simple interest auto loan with no prepayment penalties.
Avoid a Pre-Computed Auto Loan
Some lenders offer auto loans that are not simple interest loans at all, but pre-computed loans. These types of loans may be "sold" especially by smaller lenders and car dealers. The people pushing these finance deals often target high risk borrowers, or quite simply the ignorant. If you have read this, you are no longer ignorant, even if you were, but if you are a high risk borrower, then watch out for these auto deals on loans. Here are the reasons:
1. If you sign on the dotted line for this type of car loan, you are legally committed to paying back the full principal balance of the loan as well as the total amount of all interest that would accrue over the life of the loan.
2. If you agree to such a pre-computed auto loan, and then wish to pay it off early, either through refinancing or another means, the lender will usually use an outdated and expensive formula, known as the rule of 78s', to calculate a rebate of finance charges. Through this rebate you will pay a very hefty fee for paying the loan off early.
This type of loan allows the lender to apply more of the payment to interest and less to the principal balance of the loan. A pre-computed auto loan allows the lender to collect the majority of the interest due during the first half of the loan repayment period.
Shop Around For The Best Offer
If the first lender that you speak to is not offering a simple interest auto loan, with no pre-payment penalties, at a competitive interest rate, then you would be wise to walk away. There are many other lenders keen to compete for your car loan financing.
With record low interest rates, and the global lenders marketplace being created by the internet, there is a very competitive lending market. In other words, it's a buyer's market! And you, fortunately, are a buyer. Have a good shop around for the best deal: newspaper ads, internet, your bank, and the auto dealer. When checking with the auto dealer, remember to take into account any trade off between loan and price of the auto.
Also, remember not to just compare interest rates, but to look for hidden fees and transfer balances that my not be apparent at first glance. By thoroughly investigating all of your options, you should get the auto loan that is best for you now and, just as importantly, into the future!
This car loan article was written by Roy Thomsitt, owner of http://www.eliminate-credit-card-debt-now.com a>
A Homeowner Loan is a way of using the equity... Read More
Here are 8 things to consider, when evaluating lenders online:Website... Read More
People sometimes wonder about common types of loans, especially with... Read More
Bad credit loans UK can sometimes prove quite difficult to... Read More
When trying to locate bad credit loans, many people find... Read More
Bankruptcy has a stigma attached to it that is hard... Read More
Borrowing money has become more and more popular in the... Read More
Refinancing your car loan is an ideal way to lower... Read More
If you are a traveller by heart then perhaps every... Read More
A student loan is an unsecured loan made by lenders... Read More
No fax payday loan companies save you time with your... Read More
Many banks actively encourage their clients with low balances to... Read More
If your home business is starting to overflow from the... Read More
The average person some time in their adult lives will... Read More
If you need a fast way to get an emergency... Read More
It is still a few weeks to Christmas and every... Read More
How do you build a marketing strategy that can have... Read More
Bad credit is like an ongoing battle for many loan... Read More
If you're in the process of trying to find a... Read More
If you're looking to find an easy payday loan it's... Read More
Typically Cash Advance Payday Loans have no credit checks, and... Read More
Some say that the automobile industry saved the economy during... Read More
Car loans for people with bad credit are readily available... Read More
Online payday loans seem to be popping up everywhere. A... Read More
Outlined below is a guide to unsecured loans. It will... Read More
A college loan has given people all over the United... Read More
Poor credit and a financial emergency don't seem to mix... Read More
Government loans are those that the government of a country... Read More
With UK personal debt breaking through the £1 Trillion mark... Read More
If you have bad credit and you are trying to... Read More
How many times have you been casually going about your... Read More
You've probably spent years thinking that your dream car is... Read More
If you've ever tried finding a loan for people with... Read More
Every unknown road needs a milestone to configure where it... Read More
The phrase 'tailor-made' ought to be made for personal loans.... Read More
Here are some useful tips on what to consider before... Read More
A Payment Protection Plan is an insurance cover you would... Read More
Military loans are overcoming financial difficulties for army personnel who... Read More
If you have bad credit and you are trying to... Read More
No fax payday loan companies save you time with your... Read More
Car loans are a tempting way to purchase a new... Read More
Sometimes it might seem as though finding good loans UK... Read More
Financial statements, salaries, income proof, documents, paycheck, W-2 forms, 1099's... Read More
Listed below are some of the reasons for choosing a... Read More
When borrowing money it is usually because we lack the... Read More
Car loans are easier to get by using an online... Read More
Comparing payday loan lenders, also called cash advance lenders, online... Read More
At some point in your working life, you may find... Read More
If you're like most people, then you've got debt in... Read More
Trying to find a good homeowner loan UK can end... Read More
Military members the price for serving your country and defending... Read More
The usual modus operandi in most automobile purchases is as... Read More
You were on your regular walk with your wife, and... Read More
As tuition rates at many colleges continues to rise, the... Read More
A secured loan is a personal loan which is generally... Read More
A secured loan is any loan that is secured on... Read More
Buying A New Car: A new car is second only... Read More
Ever wondered what is credit? Credit is more than just... Read More
In order to understand qualifications for loan approval, let's examine... Read More
Are you wondering why choose a secured loan? A secured... Read More
Bad credit secured loans are a relatively recent addition to... Read More
Secured loans are becoming increasingly popular due to their flexibility.... Read More
Trying to find good UK secured homeowner loans might seem... Read More
Often in our search for finance options, we are led... Read More
Plato said, 'We can easily forgive a child who is... Read More
For American students, the U.S. Government came up with a... Read More
Loan |