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loan, and then wish to pay it off early, either through refinancing or another means, the lender will usually use an outdated and expensive formula, known as the rule of 78s', to calculate a rebate of finance charges.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

---

Can A Pay Day Loan Truly Be Easy?

If you're looking to find an easy payday loan it's... Read More

Are You Ready for Your Students Student Loans?

Your son or daughter is a high school senior and... Read More

Cash Advance Loans Online - A Great Way to Make it Until Your Next Pay Day

A payday advance is a loan obtained to cover unexpected... Read More

Fast Cash Now Easier Than Ever, but at a Price?

Because of the Internet, quick payday loans are faster than... Read More

Bad Credit Personal Loans ? Pertinent Pedestal for a Financial Resumption

In the arena of loan borrowing, there is hardly an... Read More

Do Payday Loans Deserve a Bad Rap?

We have all heard the stories about cash advance lenders... Read More

Top 10 Ways to Avoid Loan Fraud

Every year, misinformed homebuyers, often first-time purchasers or seniors, become... Read More

Lawsuit Loans - Caveat Emptor!

If you have been injured in an accident it is... Read More

What Is A Payment Protection Plan?

A Payment Protection Plan is an insurance cover you would... Read More

Motorcycle Loans For Military With Bad Credit

Motorcycle loans for military with bad credit aren't hard to... Read More

SBA Loan: Qualifying and Applying

According to federal government research, small businesses provide about 75%... Read More

Bad Credit Secured Personal Loans are Like Desserts-Last Course/Best Recourse for Impaired Credit

Plato said, 'We can easily forgive a child who is... Read More

Thinking Of Co-Signing For A Loan? Read This First

It is quite common for someone, who is having trouble... Read More

Everything You Need to Know About a Secured Loan

If you're not familiar with the term, a secured loan... Read More

Benefits of a Business Loan

There are many benefits in choosing a business loan, some... Read More

Poor Credit Car Loan - Get Approved Online

Poor credit doesn't have to stop you from getting a... Read More

Devising Newer Ways of Repayment

How good would it have been had there been no... Read More

Finding Good Loans for Bad Credit

When looking for loans for bad credit, many people find... Read More

The Best Day of The Week For Payday Loans

Whether your payday arrives every Friday or every other Friday,... Read More

Short Term Payday Loans - Use One Online To Get Cash Quick

Short term payday loans are now available online. After filling... Read More

Why Choose a Secured Loan?

Are you wondering why choose a secured loan? A secured... Read More

How to Spot and Avoid Predatory Lending

Predatory lenders promise loans that are "too good to be... Read More

Traditional Banks Vs Online Loan Companies

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

Guide to Secured Personal Loans

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

Taking the Time to Find a Homeowner Loan UK

Trying to find a good homeowner loan UK can end... Read More

All About Bad Credit Secured Loans

Bad credit secured loans are a relatively recent addition to... Read More

Navigation After Financial Closure - Bankruptcy Personal Loans

Bankruptcy has a stigma attached to it that is hard... Read More

Hidden Bank Loan Charges That Would Make a Pick-Pocket Envious

There can be more to a bank business loan than... Read More

Should I Get a Consolidation Loan?

If you've got a really unmanageable amount of credit card... Read More

Law Practice Finance

How do you finance a growing practice? It is impossible... Read More

What is a Home Improvement Loan?

A UK Home Improvement Loan Can Give You The Home... Read More

Overnight Cash Can Be Yours

It's possible to receive up to 500 dollars cash overnight... Read More

Guide to Homeowner Loans

Here is a useful guide to Homeowner Loans. A Homeowner... Read More