How to Reduce Credit Auto Loans
How to Reduce Credit Auto Loans
According to recording agency, Experian subprime auto buyers are almost twofold as likely to have cars they purchase repossessed by banks and credit unions they should be able to prevent this from happening by knowing the following.
Those with poor credit who buy cars are limited to shopping and comparing interest rates from different companies who are high risk lenders. But interest rates could be reduced regardless of the number if you decrease the loan’s period and pre-payment of the loan.
Why do you reduce the term of a loan? If you decrease this it will increase the monthly payments you will have to pay and it will reduce the interest of the loan intensely.
For instance, you buy a $15,000 car with a 7% interest for tax and $120 fee that are non-taxable with a down payment of $2,000 the amount that you will pay will be $15,240. If you go on paying for this amount at a 60 month period at a 17% interest then the monthly payment will be $379 every month. This means the amount that you will be paying for the term will be around $7,485.
However, if you lessen the period to only 48 months with the monthly payment of $439 your total interest will only be $5,868 that is $1,600 off the price. Not only that, you will be paying the whole amount before the payoff so you could trade off earlier and this would have a positive effect in your credit score for it would not only increase it but allow you to be qualified for other loans with lower interest rates in the future.
Pre payment works because even if you pay more in the beginning of the loan you will be able to reduce the time interval of your car payments and lessen interest rates. You can even split the high loan into two parts and pay for the high interest in an earlier time and pay off the whole amount during the maturity date. The results will be the same only cheaper. You will have big savings.
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Filed under: auto loans • car loan
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