Tips to Getting a New Car Loan

New car loan costs are highly dependent on the amount borrowed and the interest rate. Although this may seem obvious the point is that you can use this information to determine either your monthly repayments for you car loan, or the period of time which you wish to take the loan. Both of these will be determined by the amount you feel is affordable for you to pay each month.

The all inclusive costs of new car loan is decided by the interest rate and the time over which you pay. You can make use of a car loan calculater to dicover the cheapest way, as well as the best way according to what your affordable monthly repayments are. The monthly repayment amount is not of considerable importance to some people, while to others it is critical, and in the latter case you can increase the repayment term and pay less each month. However the overall cost of your loan in terms of capital repayment and interest payments will be higher.

It is often true that the longer period over which you pay, the more interest you will have paid by the time you have paid off the loan. A car loan calculator can determine that for you, and let you know the amount of interest you will need to pay. However, you can lower the cost a new car loan by careful selection of the financier. Not all are the same, so what should you be searching for?

First seek a lender that will provide you with a guaranteed fixed interest rate for the length of the loan, whether that be one or five years. Not all do this, however it is possible to come across lenders that will give you this security. Since your car is new you are able to negotiate a secured car loan, with the car as security. This will generally permit you a lower interest rate, and thus the cost will be cheaper than if your loan was unsecured.

However, there are hidden expenses in buying a new car besides the actual new car loan itself. If you have been granted a secured loan, the lender will need the car to be maintained and well looked after, and will require you obtaining a fully comprehensive auto insurance policy. This is because, should something happen to the car, it will not lose value through you being unable to affod damages or even a replacement, depending on the extent of the accident.

You will encounter this of any secured new car loan, and it is a cost that you will have to be aware of when making the decision of the size of loan that you find affordable to repay. It more than uses up the benefit of the lower interest rate through the loan being secured on your vehicle, and could be a terrible burden unless you are aware of it and have included the cost into consideration in your calculations.

An auto loan calculator will enable you to find out the monthly repayments at a specific interest rate over a set period, but this will not include the auto insurance. However, there could be a way out if this means that you are unable to afford the loan you need. If you think that you will be in a better financial situation at the end of the loan period, then you could apply a balloon.

This is bit like paying a deposit on the car, but at the conclusion of the loan rather than the beginning. You state a sum to be paid in cash at the end of the loan period, and that is taken from the amount of the loan. Your monthly repayments are correspondingly less, and you can afford the loan you need as well as the comprehensive insurance payments. As you earn more money you can save up for the balloon payment at the end.

Most financiers offer this option, and it is a beneficial one for those whose earnings are expected to increase during the period of the loan. In the event you can’t afford the balloon payment, then you may have no option to either take out another loan to pay it or to sell the car to raise the money. However, it is a good option worthy of consideration should you need more money than you can initially afford.

The cost of new car loan, then, is a combination of interest rate, period of the loan and the amount you borrow, but you must also consider the comprehensive insurance policy into this. The option of a balloon payment allows you to lower your monthly repayments, but not the over cost as you are still paying interest on the entire loan, inclusive of the balloon.