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| *Loan,banking and credit>>>auto loan |
Auto loan interest rate? |
I am buying a used car and was quoted an interest rate at 9.5 for 36 months. I plan on paying the car off in 18 months. Will I save money in the long run? Once the car is payed off, the actual interest rate I payed will be lower than 9.5 correct? well different auto landers have different rates and also it depends upon ur credit score...try this lander...http://www.carsloan.info No, the rate stays the same. When you purchase the car, they calculate what it would cost with the 9.5% for the 36 months and charge you that. So what you're actually paying off isn't the month-to-month accrual of interest, but a pre-calculated sum of what that accrued interest would be... regardless of how long it takes you to pay it off. For example, I recently bought a $19,500 car with a similar rate/timeframe. As soon as I signed that paperwork, I owed them about $27,000 (or something equally gut wrenching). No matter how soon I pay it off, I still owe them $27,000. Sad, but true. I think it's best to compare auto rates. Go to www.bankrate.com for all the latest auto rates. Go to www.advancedwealthsolutions.co... for dozens of free financial calculators. Click on Investors, then Tools & you will go right to the financial calculators. Also, if you purchase the car and use a home equity line of credit, you will be better off because you can deduct the interest on that loan versus an auto loan which is NOT usually tax deductible. Good Luck You will pay less interest by paying the loan off quicker. The rate won't change, but you pay less interest every month, because the capital is lower. However, check that your loan provider will allow you to make overpayments. I don't know what the laws are in your area, but it's not unheard of for banks to put 'early repayment charges' into loan agreements. Read the small print! When you do, another thing you might want to check is how the loan provider calculates the interest. It should be 'daily', that way you get the credit for any payments you make as soon as they arrive. Ann annual rate of 9.5% is approximately 0.8% per month. So if you borrow, say 1000, and pay back 50 after a month, that will be 8 interest and 42 off the loan. So for month 2 you only owe 958. Interest on that would be 7.66. But if you pay back 100 a month, your first payment would reduce your loan by 92. Meaning that you only pay 0.8% of 908 in the second month. That's 7.26. Every little helps. Enamore didn't calculate anything (atleast - he didn't calculate it correctly). You pay an interest rate based on the amount you owe. If you pay off the vehicle more quickly, your rate will not drop, but you will owe less, and the amount of interest that you owe will be lower. Make sure the bank does not have any pre-payment penalties (most auto finance companies don't). If you don't believe me, ask the dealer to show you a contract for 36 months and a contract for 18 months. The rate will still be 9.5%, but the finance charge (The amount in dollars that the loan will cost) will be lower. Auto Finance Company manager. |
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