Have you thought about a long term auto loan in order to get a lower interest rate? It may lower your monthly bill but is it a good idea?
The average auto loan is between 5 and 6 years and interest rates on these loans have a few factors with the way they work. Firstly, interest rates can change daily or they can change at very different times. Make sure you stay on top with what the current rates are at before purchasing an automobile and ask your auto salesman to give you the details on what kind of good promotion they can give you. Will they negotiate a better price on the car, or will they work out a deal on your financing?
Another factor to look at is the simple interest costs. This is where you the borrower would agree to pay not only the loan back but also a flat percentage of what you borrowed. Auto loans work like mortgages where most of your interest will be with your early payments.
Interest rates can add up and can dramatically impact how much you pay each month for your auto loan. However choosing a auto loan can work in your favor, especially if you’re on a tight budget. You can negotiate a lower monthly bill and just pay a higher amount at the end of the loan or if you’re looking to pay the best price, you can choose to pay a large monthly payment each month.