Car Loans - Shop Around, Compare Offers, and Watch The Small Print

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loan, and then wish to pay it off early, either through refinancing or another means, the lender will usually use an outdated and expensive formula, known as the rule of 78s', to calculate a rebate of finance charges.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

In The News:


pen paper and inkwell


cat break through


Secured Holiday Loans- Your Chance To Unwind Your Senses

"All work and no play makes jack a dull boy".The... Read More

Bridging Loans - Fulfilling Financial Shortfall between Real Estate Transactions

You are trying to buy a new property and selling... Read More

Finding the Right Bad Credit Loan UK

If you live in the United Kingdom and find yourself... Read More

Bad Credit Wedding Loans in Case You want to Race Towards the Altar with Bad Credit

So you are engaged. Congratulations. It was not easy. What?... Read More

The Average Profile of Customers Opting for a Payday Loan Cash Advance

Payday loans are loans of a small amount, taken for... Read More

The Best Way to a Farm Loan Success

The most important and difficult part in farm mortgage shopping... Read More

Cash Loans: The Good, the Bad, and the Debt-Free

Happiness is what they're selling. Relief from the crushing weight... Read More

A Renter in Debt? Take Out a Bad Credit Personal Loan

On average, homeowner households earn 95% more than renting households... Read More

Signature Loans: A Signature Can Relieve Stress Of No Collateral And Bad Credit

The dynamics of loans borrowing procedure has brought new ways... Read More

What is a Home Loan?

A Home loan is the generic term for a loan.... Read More

When is a Commercial Lender not a Commercial Lender?

A Commercial Lender is Not a Commercial Lender When it... Read More

The Wonders of Compound Interest

Albert Einstein called compound interest "the greatest invention of all... Read More

Payday Loans - Ways to Keep Your Costs Low

Payday loans offer a fast and easy solution to financial... Read More

Military Payday Loans! The Before Pay Check Financial Fiasco, is History Now

Working under the most prestigious service of the country ?... Read More

Why Student Loans are Better Than Credit Cards

You need some more money for college expenses this semester.... Read More

Small Business Loans Can Help You Write Your Success Story

Scene one: you are sitting on your office desk surrounded... Read More

Secured Business Loans ? Equipping Your Business Blueprint With Concrete Groundwork

Somebody once said, 'Business is not financial science; it's about... Read More

Shopping for a Secured Personal Loan

If you find yourself looking for a loan, you'll likely... Read More

Car Loans - Shop Around, Compare Offers, and Watch The Small Print

Getting a loan to buy your new car is, you... Read More

Guide to Secured Personal Loans

Here is a useful guide to secured personal loans. A... Read More

Getting a Debt Consolidation Loan

Should you find yourself getting in over your head with... Read More

Online Loans: The Easy Way to Apply

The internet is a great place to find the right... Read More

Facts You Should Know About Types of Loans

When you set out to borrow, you often come across... Read More

What is Credit?

Ever wondered what is credit? Credit is more than just... Read More

Car Loans After Bankruptcy - Tips to Getting Approved

A car loans after a bankruptcy is one way to... Read More

Payday Loan and Cash Advance Lenders Online - How To Compare Them

When searching for a payday loan company online to get... Read More

Guide to Home Improvement Loans

Here is a useful guide to Home Improvement Loans. What... Read More

First Time Buyer Mortgage ?Key to your First Home

Living in a rented apartment since long. Ever thought of... Read More

Christmas Loans ? A Gift on the Occasion of Christmas

It is still a few weeks to Christmas and every... Read More

Guide to Secured Loans

Here is a useful guide to secured loans. A secured... Read More

Traditional Banks Vs Online Loan Companies

In recent years obtaining loans online has become a new... Read More

Finding the Best Secured Loan for Your Money

If you're looking for a secured loan, there are several... Read More

A Guide to the Bad Credit Personal Loan

Here is a useful guide to the bad credit personal... Read More