Things You Should Know About Car Loan Interest

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• Things You Should Know About Car Loan Interest
• Every privilege comes with a price. Whether you
  are taking a loan or using your credit card, you
  have to pay off the borrowed amount within a
  stipulated period of time. Not only that, the
  amount you end up paying is usually more than
  the borrowed amount because of a certain rate of
  interest imposed on the principal sum.
• Interest varies from the type of loan you are
  taking car loan, personal loan, house loan,
  etc. So if you are looking for a car loan, you
  should know that car loan interest is quite
  different from other forms of interest like
  student loans, credit cards, etc.
• Here are a few things that you need to know about
  car loan interest
• Interest rate depends on national or foreign
  brand and new or used car
• Are you planning to buy a new car or a
  second-hand car? Is it a foreign brand or a
  national brand? All these factors come into play
  when determining car loan interest. National and
  second-hand cars usually have high interest
  rates.
• Car loans are calculated by using simple interest
• Usually car loans are calculated by simple
  interest, which means you only have to pay
  interest on the principal sum. For this reason,
  with simple interest you end up paying less than
  compound interest.
• Collateral and Guarantor
• Most banks dont ask for a guarantor as your car
  loan is anyway backed by a collateral. In case
  you fail to pay off the loaned amount, the bank
  has all the right to seize your car. However,
  banks understand that the quality of a car fades
  away with time and it may be rendered worthless.
  So, they still might ask you to bring a
  guarantor.
• Supported by amortization
• Similar to home loans, car loans use amortization
  where in the beginning your amount goes to
  paying the interest on your loan and not on the
  principal sum. The scenario gradually shifts once
  the loan term progresses, where your amount goes
  more towards the principal sum. You can also save
  a bit on paying your interest. For instance, if
  you make more principal payments right at the
  beginning of the loan term, you can
  significantly cut down the total amount of
  interest. This happens because car loans are
  calculated by using simple interest.
• Know about variable rate car loan

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• Improving your credit score.
• Paying a bigger amount as down payment
• Look for a price drop in new car
• Now that you know a bit of car loan interest and
  how it works, you can take your decision wisely
  before purchasing a car. Do you have anything
  more in mind regarding auto loan interest?