Car Loan Calculator For Canadian Auto Financing Interest Rates
Finding out about interest rates isn’t always easy. Dealerships, banks, and credit companies don’t usually provide information about the rates that they’re offering until you’re in middle of the loan process. This article discusses some information that you will need in order to get a better interest rate for your car purchase.
Your Credit Score
Your interest rate is going to depend on a lot of factors like how much money you need to borrow, which specific place you’re borrowing the money from, and of course your credit score.
Having a good credit score gives you a better chance of getting loans with low interest rates. This is because most creditors consider you a low risk client. Meaning, your creditors think that you are most likely to return the loan that you borrowed. On the other hand, you’re going to have a much harder time trying to get the loan that you want if you have bad credit. Even if you do manage to get one, you’d still going to end up with a much higher interest rate than someone with good credit.
Types of Loans
Loans are mainly classified as fixed and variable. These two vary in terms of interest rates. Fixed rate interest loans will require you to pay the same amount each month until you pay off your loan. This type of loan allows borrowers to know with certainty the total interest that they will pay for a loan. It guarantees that your interest rate will never go up until your loan is over. However, it also means that you won’t benefit if interest rates go down while you’re still paying off your loan.
Variable interest loans, on the other hand, are loans in which the interest rate fluctuates over time because it is based on an underlying benchmark interest rate or index that changes periodically. Unlike a fixed loan, you won’t exactly know the total interest and payment amount that a loan entails as it could go up or down depending on the changes prevailing interest rates.
Now, you might ask which option is the best. The truth is, the answer varies depending on your personal situation and flexibility. If you want to know exactly what your monthly payments over time will be and if you’re planning to pay off a loan over a longer period of time, you should choose a fixed rate loan. On the other hand, if you want to pay off your loan over a shorter duration and you have the financial flexibility to make higher monthly payments should the odds be against your favor, then you should consider getting a variable rate loan.
The interest rate of auto loans right now vary from 4.9% all the way up to 10%, depending on which lender you approach. No matter what your plan is, you want to make sure that you end up getting an interest rate that’s going to work for you. Your credit score may not be ideal at the moment but it doesn’t mean that you do not deserve a decent rate for your auto loan. Gather different quotes on interest rates before committing to a deal so you won’t end up paying more for a vehicle.
If you have a bad or non-existent credit, you might want to consider applying for an auto loan at New Car Canada. We provide FREE ONLINE application so you can apply any time, from anywhere in Canada. Again, we do not charge a single cent for application and approval. Click the apply button below and get approved in less than 24 hours!
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