Nobody from the middle class can afford to pay the entire cash at a time to buy a car. At most one can pay some upfront payment and get the rest of the amount financed by someone. The amount of upfront depends upon the type of loan you are taking. This means that there are several kinds of auto loans rates available: both on the internet as well as with your local banker.While there are limited options available with your local banker, you can find an unlimited number of schemes with the money lenders operating on the internet. You can check out the different schemes of each lender and then zero in on to the best scheme. The auto loans rates vary from lender to lender and within the different schemes available with the lender. You can ask for a quotation or else you can use the free loan calculator available on most websites.
The loan rates depend on the following factors:
1. The amount you are getting financed. This excludes any upfront payment you are willing to make. In case of 100 per cent finance, the interest rate is the highest.
2. The type of loan you are taking: unsecured or secured. Auto loan rates are less for the secured loans as you place some collateral. For unsecured loans, the rates are a bit higher than that of secured loans. For unsecured loans, you do not place any collateral as such.
3. The tenure of the loan: When you take a short term loan, the interest is applied to the loan amount and then is distributed into equal parts. As the number of parts is less, you get to pay higher instalments but then you save on the interest. In contrast, a higher rate of interest is applied to longer period. The advantage is that though the interest rate is high, you get to pay lower amount as instalment.
To save you the headache of calculations, many websites offer loan calculators so you can yourself calculate the different instalments for different schemes and different loan amounts.
Kalvin Jason is proficient in the credit market because of a degree in finance from the esteemed
