If you’re planning on applying for an auto loan, it’s important to take into account interest rates and how they are calculated. The interest on an auto loan is determined by a variety of factors like the length of the loan or the amount being borrowed. There are also dealership fees and taxes to consider.
Most Important Variables Influencing the Interest on Your Auto Loan
- Term of Auto Loan
For the most part, you’ll end up paying more in interest for a 72-month auto loan in contrast to a 60-month auto loan. Depending on your financial situation it may be advantageous to explore 48-month loan options. It’s a good idea to discuss the various financing options available with your car dealer before committing to any option.
- Principal of the Auto Loan
The majority of auto loans today are called simple interest loans. These loans charge interest rates that are determined by the total amount left to be paid each billing cycle. As the amount owed decreases so does the monthly interest rates. Another type is called a precomputed auto loan. With these loans, the interest rate is fixed according to the total amount borrowed and the term length agreed to when the vehicle was purchased.
- Taxes, Dealer Fees & Other Variables
Different car dealers may charge various fees while state and federal taxes will also play a role in the overall cost of your auto loan. The APR on your auto loan is a percentage that reflects the estimated interest and any expected fees attached. Take the time to shop around to find the best interest rates available in your area.
- Credit Score & Down Payment
Another important factor to consider is credit score. Having successfully made payments on an auto loan in the past will certainly help generate more agreeable interest rates. Combine a solid credit history with a larger down payment to negotiate the best terms possible. Paying on time and a little extra than is due each billing period is another factor that plays an important role in reducing interest costs.
Apply for an Auto Loan at Valley Automall
If you’re interested in applying for an auto loan, contact Valley Automall. Our expert staff is happy to answer any questions you may have about auto financing, interest rates and term options. Call us at 702-570-2257 to learn more.