Shopping online for your car loan is a wise move as it can help to save you a lot of money. However shopping and comparing for car loans can be very stressful because of the different loan features, administrative fees, loan policies and loan process which are offered by different lenders.
In lieu to reduce the anxiety of many borrowers out there, here are some useful guidelines for one to refer to when it comes to auto loan comparison and here are some of the key elements which will affect your car loan selections,
1. The APR ( Annual percentage rate ) is the actual annual cost of the loan. APR is expressed as a percentage of the loan principal. The lower the APR, the better the loan is.
2. Total cost of the loan. This is the sum of all the monthly payment plus its fees and interests during the tenure of the loan period that you need to paid to the lender.
3. Approved loan tenure duration.
-This is the allowable length of time for the borrower to repay back all the necessary principal plus its chargeable interest on the principal amount over the loan tenure duration of sometime between 48 to 72 months. However, it is recommended that a medium length of tenure is the most preferred.
4. Prepayment privileges.
-Some loaners offer discounts on Interest to their borrowers should they payout their loan faster than in agreement. Some lenders allow their customers to have a maximum of 3 extra payments per year only, while some does not allow for any extra payments to be made at all. Please remember to ask for such discounts if you are not sure if your lender has this available or not.
5. Early Discharge penalties.
On the contrary, some lenders will impose penalty to their lenders in cases where loan are paid off before the maturity date.
6. Loan Interest.
– Even with the same loan company, different applicants will get different rates for their auto loan applications because the Loan interest offered by the lender to the individual applicants will be different based on these few key criteria such as: the credit score of the applicant, the loan amount, the tenure period, the type of vehicle on loan, the borrower’s age, driving records, occupational status and many more.
7. Feasibility of discounts.
– Some auto loan company offers ‘Loyalty discounts’ to their loyal customers who had came back for auto loan for their second vehicle within three years time after the first auto loan was approved. The percentage of discount may range from 15% to 25%.
8. The availability of securing your auto loan against your home equity.
– This may help in cutting down your auto loan interest payment because the insurer is considered to be in a lower risk now with the home equity.
All the above are key factors which need to be taken into consideration for evaluation of loan application. Of course the priority of these eight factors above will not be the same for different individual. It is then appropriate for each of us to rank these factors base on their criticalness in order to arrive at the best auto loan.