4 Helpful Car Loan Tips
1.Choosing the Loan Type
Loans come in two varieties – fixed interest rate and variable interest rate. The type of loan is up to the applican’t. They each have their good and bad points and the loan type chosen is proportional to the amount of risk the loan applican’t wishes to take.
The fixed rate is an interest rate that is established at the time of the loan according to economic conditions and remains the same, or fixed, for the duration of the loan, despite any fluctuations in economic conditions. Opting for a fixed rate will prevent an increase to a higher monthly payment, but it eliminates the possibility of reducing payments in the interest rate decreases.
The variable rate is subject to the economic conditions at the time of the loan and is subject to adjustment as the market fluctuates. That fluctuation can increase or decrease the monthly payment or in the event of a small adjustment allow the payments to remain the same.
Before deciding which rate to choose the lender will provide you with an approximate monthly payment amount based on the current variable rate. Determine the maximum amount of payment you can make in the event of a rate increase, were you to take a variable rate loan. If the added payment amount is not much more than what you can realistically afford, consider a fixed rate loan.
2.Early Repayment
If there is no penalty for early repayment, you can make it a rule to pay more than the required minimum either every month or every other month, depending on the availability of funds. You may also decide to dedicate a bonus or a portion of a bonus to repaying the car loan as soon as possible.
Besides getting the debt off your books, early repayment will save you interest fees and in the event of a variable rate with redraw, may allow you to call upon funds if necessary.
If there is a penalty for early repayment crunch the numbers to see if the savings in interest rates is at least equal, but not more than, any penalty that may be assessed.
3.Weekly rather than monthly Repayment
It is a lot easier to make 4 small payments rather than 1 large payment. If this option is available to you, it should be considered, especially if the goal is to pay the loan off early. Weekly payment is also a money saver as interest is calculated monthly and you will get credit for making than a payment than you really did.
4.Know your credit score
Knowing your credit score will give you an idea of where you stand loan and interest wise. Usually, the loan interest is based on the applican’ts credit score and the rate will be finalized more or less of the advertised loan when the loan is approved. This knowledge will allow you the opportunity to either improve your credit score or search for a more competitive rate based on your credit score.
Featured Personal Loans
| Personal Loan | Details | Min Interest Rate | Min Comparison Rate | Min Loan Amount | Min Loan Terms | Apply Fee | |
|---|---|---|---|---|---|---|---|
 ME Bank Personal Loan | A low rate personal loan from ME Bank with no application fee for a limited time. | 13.59% | 13.81% | $5000 | 1 year | $0 |   |
 Aussie Personal Loan | A smart way to consolidate your bills to save time and money so you can pay for your holiday, a wedding or renovate the house. | 13.90% | 14.84% | $3000 | 1 year | $199 | |
 Sugar Money Personal Loan | Fixed rate personal loan with flexible options to get you funds when you need it. | 13.99% | 15.00% | $3000 | 2 years | $250 | |
 bankmecu Personal Loan | A convenient and fast way to purchase a car or debt consolidation with affordable rates and fees. | 13.49% | 14.55% | $1000 | 1 year | $150 | |
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