What Are The Top Factors Which Will Affect Car Loan Interest Rates?

By Author: J.J. Yong
Total Articles: 963
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There are a lot of key crucial factors which play important role in determining the car loan interest rates. If we can pay more attention to these main criteria, we can easily tell what to avoid and what to focus on when it comes to auto loan application,

Here are some key criteria which heavily affect how the interest rate of an auto loan is derived,

1.New car versus used car. Normally used car ischarged a higher loan rate as compared to a new car. In some cases, the bank or the finance institutions may not even approve the loan for a very old car.

2. The length of the loan tenure - Some loan provider offer up to nine years of loan tenure to help those who is unable to pay for higher loan payment although the optimum length is 48 months. Remember that the longer the loan tenure period, the higher the rate because vehicle tend to depreciate more in the long run.

3. Fixed or variable interest rate - Some auto loan provider offer variable interest rate to their regular customers. This is an auto loan policy where the car rate will fluctuate depends on the market economy When the economy is good, a low ...
... interest rate is charged for the auto loan while when the economy is deteriorated, loan rate tend to increase. So there are certain risk in this kind of interest policy that one need to bear over the whole tenure period.

4. Your credit score - borrowers with good credit standing will often be offered a lower interest rate because they have been perceived to carry lower risk in paying back their auto loan payment as compared to those with low credit score. Thus, it is highly imperative for us to ensure we have good and healthy credit score when it comes to loan application.

5. When a particular car model is about to "End of Life", the car dealer will try their best to clear off their current stock to make ways for their new launch car model. This would be a good time to get yourself a car because this is a good opportunity to demand for a lower rate from the car dealer.

6. Combined loan - By getting a few auto loan policies from the same loan provider for more than one vehicle, there is a high possibility that you will be entitled for a good discount. In this case, the chance of getting a lower rate is pretty positive.

Getting your hand around these factors which would affect the car interest rate is beneficial because you will be able to avoid those which will badly affect the offer, while getting yourself to improve on those areas which would help to reduce the auto rate as a whole.
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