So, you’re in the market for a car. Awesome. You’ve got your finances in order, your credit scores are as straight as an arrow, and thus, you’re considering taking on a loan for that new car. Sound decision. Taking out a loan is easy and all, but have you considered the interest rate you’re taking on?
Interest rate on car loans
Obviously, the interest rate levied on the loan you take out will vary a lot depending on the age of the car you’re buying. Typically, the rate levied on an older car is higher than that of a new car. Given this variance, the rates can range from as low as 1.5% to up to 25%. Of course, this is not something set in stone, so the rate can be lower or even higher than the range above.
Should you only focus on the interest rate?
The answer is a resounding no. While it is true that the interest rate has the greatest overall impact on your debt finances, it is only half the story. The other facet you ought to take into consideration are the establishment costs. Think about it. You could easily be granted a loan with a super low interest rate, but the establishments can be on the high side.
Such loans can end up being very expensive, if you aren’t careful. Think about membership plans. To be a member of an upscale club or society, you often have to pay a creation fee, in order to become a member of said club or society. Even if the monthly charges are low, with a high creation fee, the subscription overall can become very expensive.
Most car loan rates tend to be variable in nature, so do note down the small script as you make a decision. Check out ikanobank.dk for more.