A variable interest rate means that the rate can change and fluctuate with the market during the life of the loan. So if you take the loan out at the above 10%, your rate may stay the same, rise or drop many times within the loan's life.
If interest rates are high to begin with and the rates drop then a variable interest rate will mean lower payments each month, resulting in a tidy savings. However, if the market tanks and interest rates rise, you could be looking at paying much, much more a month than you anticipated.
Secured vs. Unsecured
Paying your loan off early may seem like an attractive idea at first until you read the fine print and learn that you'll probably pay a fee for doing just that. Banks and loan companies don't want to lose money on the interest you pay them every month, and if you pay early that's exactly what will happen. To ensure they get a piece of their share they institute a fee for paying your car loan off early.
ReplyDeleteIn Conclusion
Now that you know the differences in interest rates and what fees you might be charged if you're not paying attention, along with lots of other handy tips, you can rest easy when applying for that car loan. You will get out of the car loan office and behind the driver's wheel that much quicker.
Do you need financing for a car purchase? Whenever you're in Australia and need a car loan, make Start Local your first stop. Start Local is Australia's fastest growing local search engine and business directory. Find the most