These might be exciting times for car loan borrowers who are on the search to find low rates to help them purchase their new set of wheels. Small loan lenders are offering rates as low as 4.85%, but borrowers should look beyond the enticing low rates if they are looking for the best deal in town.
Low doesn’t always mean good
Finding a loan that comes with the lowest rate that is available on the market might make you feel like you have just discovered gold, but it can be a mine trap. When you look beyond the interest rate and start analysing its features you might realise that the deal is not as sweet as you think. Some low rate loans can come with strict features that do not allow you flexible repayments which can affect how you eventually pay off the loan.
Keep an eye out for 0% interest rates
0% interest rate car loans are not the devil of loans. If you are disciplined enough to take advantage of the 0% introductory interest rate for the period it is running for and meeting all the repayments on time it can be a boon. However, if you consider the long term of such loans you will realise that it becomes more expensive when the interest rate reverts to the actual rate of the loan which can be higher.
What are the fees and charges?
This is an important feature above all. The fees and charges that come with a car loan can either make or break what you could be paying. Car loans come with fees such as establishment fees, early termination fees. If you fail to evaluate such fees that can be easily influenced by your interest rate, you could end up paying through your nose.
Choosing the right type of car loan
There are various types of car loans that are available to finance a car that will be used for personal or business purposes. Options that are available to you can be secured car loans, dealer finance, unsecured personal loans and chattel mortgage which are designed to meet certain buying requirements. Finding one that fits will depend on your needs. It will be in your best interest to consult a broker or your lender to see which one will best suit you.
A car loan that works for your budget
Car loans are all about finding something that has great quality and is affordable for your budget. Choosing a loan with excessive fees or rates in the hopes that making large payments will regulate your loan eventually can be financially risky. You will be better off if you choose a loan that matches your budget and comes with comfortable repayments that you can make towards reducing your car loan.
Finding a car that fits the bill when it comes to something economically friendly is essential. Keep in mind that a car depreciates like crazy. Therefore, you want to spend money on something that can get the job done and also helps you save money that can be used elsewhere.