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loan, and then wish to pay it off early, either through refinancing or another means, the lender will usually use an outdated and expensive formula, known as the rule of 78s', to calculate a rebate of finance charges.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>
![]() |
|
![]() |
|
![]() |
|
![]() |
If your home business is starting to overflow from the... Read More
Secured loans are one of the most popular personal loans... Read More
Education never ends ? it is not said without reason.... Read More
Bad credit loans UK can sometimes prove quite difficult to... Read More
People sometimes wonder about common types of loans, especially with... Read More
If you're getting in over your head with credit, you... Read More
How many times have you been casually going about your... Read More
Market research of UK's cosmetic surgery ascertains the fact that... Read More
The most important and difficult part in farm mortgage shopping... Read More
Have you ever wondered what is credit scoring? Credit scoring... Read More
Every time you go for a loan, the bad credit... Read More
These days having a reliable and safe vehicle to drive... Read More
What are the opportune times to avail of military payday... Read More
A car loans after a bankruptcy is one way to... Read More
Plato said, 'We can easily forgive a child who is... Read More
No fax payday loan companies save you time with your... Read More
If you're searching for an adverse credit homeowner loan, you... Read More
A loan is the reason many students are able to... Read More
Over recent years, personal loans have become a popular solution... Read More
From different surveys, it is seen that the number of... Read More
A Payment Protection Plan is an insurance cover you would... Read More
A no income verification home equity loan is a second... Read More
Locating the cheap personal loans that you're looking for isn't... Read More
Outlined below are some of the reasons for choosing a... Read More
When looking for UK loans, it's always important to take... Read More
There are many benefits in choosing a business loan, some... Read More
A title loan is a loan of money secured by... Read More
Isn't it the trillionth article on unsecured loans? All are... Read More
Here are some useful Debt Consolidation tips. Debt consolidation is... Read More
There can be more to a bank business loan than... Read More
If you want to apply for a loan online, you... Read More
Here is a useful guide to Personal loans. What is... Read More
Government loans are those that the government of a country... Read More
Listed below are some of the reasons for choosing a... Read More
Fast car on open roads. It is a perfect picture... Read More
If you have bad credit, have an emergency and need... Read More
The latest IDS figures for unemployment the claimant count measure... Read More
Many people are confused by the different types of loans... Read More
Whether your payday arrives every Friday or every other Friday,... Read More
A Brief Look At Loans "Innovative financial packaging" is how... Read More
You need to be wary of guaranteeing a loan. What... Read More
A $500 payday loan can be a real life saver... Read More
If you live in the United Kingdom and find yourself... Read More
While most companies seeking venture capital initially think about angel... Read More
Cash advances have become quicker to process with online payday... Read More
If you are a homeowner in need of a home... Read More
Here is a useful beginner's guide to bad credit secured... Read More
It is no secret that thin or no credit can... Read More
Your car loan is now less than an hour away... Read More
Since the invention of the first self propelled car by... Read More
There is a huge market for homeowners who have credit... Read More
A student loan is an unsecured loan made by lenders... Read More
People sometimes wonder about common types of loans, especially with... Read More
So you have never taken out a loan? You don't... Read More
Wedding loans because wedding may be made in heaven but... Read More
It has always been an issue for home buyers to... Read More
Bad credit is like an ongoing battle for many loan... Read More
Laws have been created to protect people against "Loan Shark"... Read More
A Commercial Lender is Not a Commercial Lender When it... Read More
A quick cash loan also called payday loan, cash advance... Read More
You've probably spent years thinking that your dream car is... Read More
Free Auto Loan TipsThe following tips should help increase your... Read More
Different types of loans are available for almost every aspect... Read More
Online lenders might be high quality, serious companies such as... Read More
People have to work to survive. The desire to maintain... Read More
If you find yourself looking for a loan, you'll likely... Read More
Loan |