Car Loan interest rates
The main cost of any loan is usually the interest rate. This is what almost all finance companies advertise as their selling point and low interest rates are always eye catching.
Generally interest rates on car loans are usually calculated monthly. So each month you can see on your statement how much you have repaid on the loan, how much interest has been charged to you and the balance of your loan or how much is still owing.
As with home loans, you can get either a fixed or variable interest rate car loan. With a fixed rate, you know how much the interest rate will be for the life of the loan. Variable rates, as the name suggest, can change during the life of the loan depending on different economic conditions.
Most car loans have different lengths from one year up to seven years, though many companies only have a five year maximum. The interest they charge for the same loan taken over different periods can vary, so you should always check this before applying for a loan.
The interest rate can also vary depending on whether you are buying a new or used vehicle.
Business car loan rates again, are often different than personal car loans, and there are specialist business lenders who have deals only available for commercial car purchases.
Personal loans can also be used to buy cars and some banks and other lenders offer personal loans only, which can also be used for vehicle purchases. Personal loans are often have a lower interest rate when they are secured against assets, while unsecured loans can have a higher rate. This is because the lender considers it a lower risk to lend money to someone with a valuable asset like a house or another car.