Buying a New car? Get to know the different Loan avenues
Most people drive out of a dealership with a shiny new car after agreeing to a car loan that’s actually too expensive for them. If you are in the market for a new car, it certainly pays to shop around, by taking time to read the fine print, understand the process, know about different kinds of auto loans and be smart about comparing rates. You should also get to know the pros and cons of each kind of auto loan.
The first kind of auto loan and the most common is a loan that has a fixed interest rate. This necessarily means that your interest rate will not change over the entire period of the loan, and you will be protected from any hikes in interest rates during the term. Variable rate loan has a certain amount of risk since the interest rate can change, but usually has a lower current interest rate than a five-year fixed-rate loan. Variable-rate auto loans will be based on the prime lending rate prevailing at the time.