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How does APR on a car work?
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How does APR on a car work?
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| 19/12 2013 11:34
| 19/12 2013 11:46
APR = annual percentage rate which is the interest rate you pay for the money you borrow. Whenever you borrow money for any reason you pay interest. The only way to avoid is to not borrow money. You would have to ask whom your borrowing the money from if there is a penalty for paying off early. Typically there is no penalty for early repayment.
| 19/12 2013 11:42
You avoid it completely if you pay cash and don't borrow the money to begin with. You can avoid some of it by paying off early or making additional payments or increasing the payment amount. The more you can pay early in the term of the loan the more you save. For instance paying an extra $100 on the first loan payment will save you more in interest than paying an extra $100 a year later.
| 19/12 2013 11:55
Im paying my moms car off for her. Now Im paying it off in 36 month instead of her loan agreement for 48 months. why is it that they are still making me pay the interest for the full term loan????????
| 19/12 2013 12:56
Almost always the loans are simple interest which means if you pay a few days early, you save a few days worth of interest. And/or if you pay the entire loan off a year or so ahead of time, you save a lot more interest. I did that the last time I financed a car. It was a 36 month loan and after about 16-17 months, I went ahead & paid it off and saved a good bit of what I would have paid in interest. That was 25-26 years ago I guess and I havent had a car loan since. One thing they did tell me way back when is that I could pay as much extra as I wanted, whenever I wanted but those extra payments would not acculumulate and let me skip payments in the future. So if you pay 4 months at once, you cant skip one next month. The total amount of interest as per the contract is if you pay every single time on the due date, never early and never late.
| 20/12 2013 10:14
I'm not entirely sure what you are asking? The definition of APR has already been explained pretty good by a couple of answers, but I will add again: APR (Annual Percentage Rate) is interest rate for a whole year (annualized). The APR you'll receive is mostly determined by: Your credit history / credit score (almost always FICO score) Are you buying new or used vehicle? New cars get better interest rate than used cars How long the loan's terms are? The shorter the loan length usually get a lower rate Borrowing source? Credit Unions and online banks usually offer lower interest rates than big banks Also, for a used car loan, getting financing through the dealership may have a higher interest rate because they get a kickback from the bank. I recommend ALWAYS getting pre-approved financing. Yes, normally you can avoid it. Putting a large down-payment means you will borrow less and pay less interest. Fixing any "credit issues" will lower your interest rate, and avoiding the big "bully banks" also helps. Also, if your car loan is simple interest calculated, then paying the loan off early will help you save on interest (with a simple interest loan you're charged interest each month based on the balance you owe). The trick is to start paying off the loan at the beginning, if you wait towards the end of the contract you already paid most of the interest and may not save much (look up amortized scheduling). At all cost avoid pre-computed loans; most car loans are simple interest but there are still some sub-prime lenders and Buy-Here-Pay-Here dealer lots that offer pre-computed. Also avoid any loans that have an "early payoff penalty". Any decent auto loan has no early payoff penalty and will not obligate you to pay interest upfront.
| 19/12 2013 15:48
APR is the percentage interest you pay annually for the privalege of using someone else's money. Interest is calculated each month based on the remaining loan balance. So the more of the loan that is paid off, the less interest is added each month. If you pay extra each month, it reduces the total interest you pay over the life of the loan.
| 19/12 2013 13:48
ANNUAL PERCENTAGE RATES is short for Annual percentage rate. It's really simple this means the total credit will cost over some sort of 1 year period of time. Stated as a one proportion, your ANNUAL PERCENTAGE RATES calculation thinks the interest pace and all other service fees to be able to indicate the overall cost of a bank loan within the total calendar year. Loan companies ought to talk your ANNUAL PERCENTAGE RATES prior to a understanding to carry credit.
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