3 Things to Consider Regarding Low-Interest Rates
When searching for financing options to buy your Calgary used car, you may think you found the best option with a low-interest rate. When you should be made aware that there are multiple ways for you to really analyze and understand your loan to make sure you are making the best decision.
First: Consider The Length of The Loan
While a loan may appear to have a low-interest rate, if this loan lasts for years longer then is really should, then it could be a bad deal. Be sure to do your math and understand how much the interest fees will really be costing you at the end of your loan. You may be surprised how quickly it can add up, making the shorter loan with slightly higher rates can potentially be a much better deal in the long run.
Second: The Model And Make of The Car
If you are looking to finance a new vehicle, lenders are going to feel more optimistic knowing the car can be resold at a much higher rate. This differs from used vehicles where if a default occurs, lenders will have a difficult time making a profit and reselling the vehicle. This can affect your interest rates. For this reason, you should be aware used cars are more likely to have higher interest rates.
Third: Are You New to Credit?
If you have been building credit for a short amount of time or you do not have much history of strong credit, this may not be a major red flag but can provide lenders with little credibility on your part. Consider an auto loan to help build trust with lenders. Auto loans tell the lender the car will be repossessed in case you are unable to make payments. If making payments on time is no concern for you, then this is a good option. It is also a good way to help build your credit and diversify your credit history, assuming you are consistent with your payments.
While a low-interest rate loan can look very appealing, making sure you have all the information to make an informed decision will fill you with confidence that you made the correct decision. Before signing anything, be sure to consider the length of the loan, the type of vehicle you will be purchasing, as well as your credit history to make sure you are getting the best deal. When in doubt, contact Calgary to help you make the decision.