When comparing car loans it is best to compare the monthly repayment rate over the term and not the interest rate.
Other car finance lenders and car yards/dealerships, may advertise cheap interest rates however, included in their monthly repayments may be a lot of extra fees and charges such as admin and processing fees.
Its best to find out how much the repayments are and over how many months.
Option A: a 9% interest rate for a car that is worth $7,000.00, you would compare the monthly repayment i.e. $160 a month over 60 months’.
Option B: a 5% interest rate for a car that is worth $7,000.00, you would compare the monthly repayment i.e. $170 a month over 60 months’
Therefore, even though the interest rate is higher for option A, you would end up paying less for the car as $160 x 60 months = $9,600.00 compared to $170 x 60 months = $10,200.00
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