Amanda's Note: This was provided by an online contact.
If you’re looking for the lowest rate car loan, it may be tempting to instantly opt for the cheapest option you find. Think carefully though before you commit to the lowest rate car loan as this may not necessarily work out as the cheapest choice for you long term.
Doing some sums, figuring out long term payments and asking for expert help can all help to get you the lowest rate car loan for a price that is genuinely good value. Always take the time to do your research, plan properly and ask for help to avoid facing higher costs further down the line.
Are low rate car loans the cheapest option?
It’s certainly true that when looking for a car loan, most people will try to find a loan with a low rate of interest. It’s understandable that you don’t want to be paying high amounts of interest each month in addition to your loan repayments.
Remember that there are a number of things to weigh up though when you’re looking for a cheap car loan. Low interest rates is an important factor but there are other things to consider too.
What to look for when looking for a cheap car loan:
Don’t get sucked in by a car loan just because it has a low interest rate. You need to check out what other fees will be expected of you throughout the course of the loan – look out for high administration fees, which charge you for setting up the loan.
You’ll also want to be clear about whether there will be early repayment penalty fees to pay. If you want to pay off your loan early (to clear your debt and avoid future interest), you may face high penalty fees which counteract the fact that the loan was cheap in the first place because of low interest rates being offered.
Many low interest car loans require you to have a deposit. Always check with the lender if this is the case, and if so, how much deposit you’ll be required to give them. Never stretch yourself financially – if you can’t afford the deposit, don’t be tempted into getting the loan.
Think long term
The best way to approach a low interest car loan is to think long term. If you need to, get out a calculator and do some budgeting. By taking the time to do the sums, you can work out whether a low interest car loan really does offer you the best deal long term. Consider how long the loan will be for – how many years will you be paying off the low interest car loan compared to a higher rate loan?
If you’re confused by the sums and maths involved, ask for expert help. Expert loan brokers will be able to save you time, money and a huge amount of unnecessary stress by quickly directing you to the best loans for you.