Interest Rates and Car Loan Payments in Puslinch

Interest Rates and Car Loan Payments in Puslinch

Posted on February 24, 2022

Interest rates and car loan payments vary depending on the kind of loan. Auto loans with higher rates within short periods are often more challenging to pay back.

It is essential to know the interest rates of any Puslinch auto loan before purchasing a vehicle. This will allow you to make an informed decision and work with your budget.

This article by our auto loans team will take you through making sense of interest rates and car loan payments in Puslinch.

Factors that affect interest rates on car loans

The interest is the amount lenders demand on your car loan. Interest rates on cars are usually fixed depending on lenders.

Different elements also come into play in determining car loan interest rates.

Your credit score

Most rates are charged based on your credit score. A good credit score will attract a lower interest rate which you will find easy to repay.

Once your auto loan gets pre-approved, your lender will let you know the actual rate attached to your loan before the final details and approval.

This will help you calculate your interest rates alongside your budget to know how comfortable the payment plan is.

Using different possible interest rates will help you understand your payment rate and how much your budget can handle.

Types of auto loan in Puslinch

Generally, the interest rates on different auto loan types differ. While your credit score helps secure a favourable loan deal, the kind of auto loan you choose determines the rates and payment structure.

For instance, unsecured Auto loans usually have higher interest rates due to the lack of a lien as an insurance policy.

Duration of the loan

When you secure an auto loan, you can choose the length of time you wish you pay your debt. You can choose to stretch the repayment duration, but the interest rate will also increase. Therefore, lenders often charge less on auto with a shorter payment duration and vice versa.

Long term loans allow you to pay less every month than a shorter-term loan which attracts a higher monthly payment. While it looks like a more comfortable plan to opt for a long term loan payment, the interest rate increases over time.

Also, cars are mechanically built and will devalue over time. So you may find yourself still paying for an undervalued vehicle at a high cost.

New vs used cars

Many people tend to opt for used cars when financing auto loans. However, interest rates on new cars are usually less than the interest on used vehicles by about 4%.

Down payment

A money deposit is a sure way to reduce the interest on your car loans. Lenders generally charge higher rates without a down payment or collateral available.

An excellent credit score, shorter loan term and a favourable loan type are all critical aspects that help you get a lower interest on your car loan. Never be in a rush to get a car loan from any lender.

We’d love to help you find the perfect car loan. Simply fill in the form below and we’ll get back to you ASAP! 

Thanks for reading. Be sure to connect with us on Facebook, Twitter, Instagram, or LinkedIn to stay up to date on our latest great articles!