Typical Process for a Car Loan Adelaide
A car has become a necessity rather than a luxury in this modern era. Different people use different types of cars as per their preferences. You will come across many people who either opt for a brand-new car or a used one. Whichever car you opt for, purchasing one means going for a car loan. When you are in a car showroom, it naturally means that you have already spent a lot of time doing your research on the best possible car as per your needs. However, when it comes to a car loan and the way it works, most of you draw a blank face.
So, see below or the guide at buttonwoodfinance.com.au/car-loans-adelaide/ to learn more.
Factors That Affect the Monthly Payment and Total Payable Amount
When your car loan gets approved by a lender, you receive the loan amount in a lump sum. You need to pay off this amount, together with the interest amount, in monthly installments. There are three basic factors that affect the monthly payment and the total amount that you need to pay back to the lender.
- The Amount of The Loan: This amount may be lower than the actual value of the car. It depends largely on whether you make a down payment or you opt for a trade-in vehicle.
- The Annual Rate of Interest: This happens to be the effective rate of interest that you need to pay on the loan amount. It is also referred to as APR or Annual Percentage Rate.
- The Loan Term: This refers to the total time that you have within which you need to pay back the loan amount. This normally ranges from 36 months to 72 months.
The Way These 3 Factors Affect Your Monthly Installment
The idea of paying out a low monthly installment is always welcome. However, it is also important for you to look at the bigger financial picture. Low monthly installments may also signify a higher total amount for the car that you need to pay off to the lender over the loan duration. The three above discussed factors can easily be adjusted to affect your monthly installment.
- Reduced Loan Amount: The loan amount can easily be reduced if you opt for a larger down payment or go for a trade-in of an older vehicle.
- Reduced APR: Different car loan lenders may have different annual percentage rates. If you opt for the reduced annual interest rate, you can easily save a large sum of money by the time the loan period ends.
- Longer Loan Period: It is true that opting for a longer loan period will mean paying reduced monthly installments. However, if you calculate carefully, you will come to know that you pay a higher amount for the car by the end of the loan period. Thus, better opt for a reduced loan period to save money.
When it comes to car loans, it is always better to take some time and think carefully before you choose the lender and his rates. After all, you have to pay the loan amount from your own pocket.