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Tips to Get Great Auto Loan Interest Rates

The loans offered can be classified into two types depending upon the interest rate, namely, fixed interest rate and the variable interest rate. A fixed interest rate is the one that does not change throughout the span of the loan which is more convenient and safer, if it is does not contain any hidden fees.

On the other hand, a variable interest rate is the one that fluctuates over the span of the loan. This would be convenient for those who would be in a position to fluctuate or better the monthly payments so that the loan can be cleared off faster. This can be decided by the borrower or the lender.

The most common mentality of the borrowers who are in an urge to own a vehicle is to brush aside or just ignore with least regard, the interest rates which will be charged on the loan. This may be due to ignorance or the difficulty in understanding the implications of the interest rates that would be charged and the overall effect it would have on the payments, even if the rates differ marginally.

Hence, it is wise to compare the various interest rates offered by the lenders considering into account every possible fee and charge that would be included into the loan. The other factors that influence the interest rates of auto loan are the period of repayment of the loan -the longer the period of repayment, the higher will be the interest rate.

Also, the fact that the loan is secured or unsecured plays an important role in determining the interest rate. Certainly, unsecured auto loan carries a heavy interest as compared to the secured loan. The credit history of the borrower also influences the interest rate. So, it is better to set right the credit score before applying for an auto loan, to get the minimum interest possible. A credit score that is above 750 is considered to be good.

Another hidden fact is that the interest rates for auto loans tend to be low towards the end of the month because lenders would like to increase the sales towards the end of the month. In addition, if the borrower can afford to make a considerable amount of down payment, it increases the chances of getting a lower interest rate since down payment is an indication of the repaying capacity of the borrower and the lender would be convinced to demand a lower interest rate.

So, a lender should be smart enough to put down his cards that are in his favor one by one to strike the best deal while opting for an auto loan.