Factors That Determine Your Car Loan Rate

Factors That Determine Your Car Loan Rate

Everyone loves to ride a new Car but sometimes it is not affordable to purchase a new Car. There is also a great problem to negotiate with the Car dealers while purchasing a new carSo, mostly people prefer to buy a new Car on a leasing plan. By this way there would be no burden of paying the Car price at once. You can pay the price of the Car in installments in a specific period of time.

Market Survey

Those people who apply for a Car Loan which is being provided by the car financing companies, pay interest to those companies. Some people do not survey the market and do not compare the interest rates of different companies.By this they suffer a lot and they have to pay a large amount of interest on their Car financing Loan. So it is very important to make a market survey and to compare different companies.

Everybody wants the best interest rates from the financing companies but there are also some certain factors which affects this condition.

car loan

The major factor that affects the interest rates ratio is the Credit score. If you are having a good Credit score you will get a good package with good interest rates. But if you do not have good Credit score and it has a bad history, you will be paying high interest rates.

Terms and conditions of the Loan

There are some points which should be kept in mind while dealing with the terms and conditions of the financing company to purchase a Car. First of all make your concept very clear about the time period, in which you have to pay back the amount of Loan.

Select a shorter period of time and it should be according to your nature of job and income. Second thing is to determine the rate of interest. Try your level best to get the minimum rate of interest from the financing company by showing them your very good Credit history and score.

Monthly installments

If you are signing a contract with the company to purchase a Car on a Leasing plan, be very sure about the terms and conditions and especially with the time frame. Select the time period according to your nature of job and your monthly income. Calculate your monthly savings that how much you can pay for the Leasing plan of your new Car. These calculations will be helpful for you in future and will save you from any inconvenience. Company will also charge you extra penalties if you do not pay the installments on time.

Factors That Determine Your Car Loan Rate
Factors That Determine Your Car Loan Rate

Market value and type of Car

Companies are also financing used cars. Normally used cars are charged more interest than new cars. So decide it that what Car you are supposed to purchase on a Leasing plan. Try to consult a consultant to know about your financial position and about your savings plan.

Credit history and score

Your Credit score is very important in determining the rate of interest that will be charged to you on your net amount, which is to be paid. If your Credit score is more than 600, you can get a very good package and rate. Try to improve your score on daily basis to be more financially strong.