It’s an irony how we spend days, and sometimes even months researching the car models to find out the ultimate sweet spot between a good and affordable one, and at the same time we almost forget to explore various car loan options available. That’s indeed a big mistake, and we often pay with hundreds of dollars for that mistake alone. How? Well, unless you’re well informed about all the loan options you might qualify for, you’ll straight up land on the grip of the car dealers for your Canada car loan requirement. And car dealers are notorious for marking up the rate of interest on top of what you really qualify for if you’ve obtained the loan from an alternative financial institute. It’s a pity how one single mistake could make you paying hundreds of dollars more down the line during your loan period. However, if you’re not reading this article on the way of your return home with your brand new car, you still have time to make a wise and informed decision which will save you some real bucks that you can spend on anything else your heart desires.
When getting a car loan, the key is to find the perfect balance between the full cost and the monthly installment. If your only goal is to reduce the monthly payment as much as possible, chances are the total duration of the loan period will be increased significantly, resulting in much higher spending on total interest. So, decide which amount you can pay monthly without affecting your other priorities, and at the same time try to reduce the loan period as much as you possibly can. As said already, finding the right balance is the key here.
When shopping for vehicle loans, check the term APR more carefully. APR, or annual percentage rate, is what decides how much interest you’re going to end up paying, the lower the number is – the better. For instance, if the total loan amount and the loan duration is constant when comparing two loans, you’ll save hundreds of bucks in the loan which has a lower APR number.
The next point of interest should be the length of the loan period. The longer time you take to pay the loan off, the more it will cost you. Getting a loan with a shorter duration will save you in total cost, though that means you’ll have to commit for more money as monthly installment, which can be beyond your capacity. Hence, be logical and check how much you can afford to pay monthly on a regular basis without fail, and based on that figure, you should try to pick a loan tenure as short as possible.
When deciding on car loan tenure, keep one thing in mind that the longer the period is, the more time it will take you to break even. For instance, suppose you have got a loan for 60 months period – that means after more or less 18 months, your car will worth more than the existing loan amount. Hence, if for any reason, you want to sell your car earlier than 18 months, the price you can get won’t be enough to pay off the due debts. God forbid if for any reason your car gets destroyed, or perhaps stolen, the insurance amount won’t be sufficient to cover rest of the loan due.