To help you find the best car loan you need to understand how APR and loan terms work.
– APR – this is the interest rate at which the lender is offering funds
– Loan Term – this is how long you have to pay the money back which you have borrowed.
One of the most cost effective ways to borrow money is to balance APR and a loan term. Many low APR offers are only available on long term products or are subject to many underwriting conditions. At first these seem like a good deal but when you calculate how much interest you are paying over the whole loan, especially once you have confirmed the true APR, you may find that it is actually better to take advantage of the fixed rate offered to you through the dealership.
Setting Your Budget
The best car loan is not just about finding the cheapest APR. You also need to make sure the product can work for you and this means setting your budget. Too many people get carried away and take out finance deals that they cannot really afford. You must never borrow more money than you can afford to repay out of your monthly income. This just puts a huge strain on your finances and makes it very difficult for you to meet your financial obligations. Here are a few tips for helping you to set your budget:
– Existing Repayments – look at your existing credit products including credit cards, store cards, personal loans and mortgages. Calculate how much you need to meet these repayments each month.
– Essential Bills – make a list of all your essential bills such as utilities, groceries and fuel.
– Extras – also make a list of any extras you spend on during …» Read more