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SpanishWhy the Lowest Interest Rate isn’t Always the Best Deal
Finding the lowest interest rate on a car loan can be a tempting way to start shopping for your next car near Speedway and Indianapolis, but low APR isn’t the end-all be-all. Many auto loans come with low interest rates but longer terms. A low interest rate on a six-year loan, for instance, might end up costing you more in the long run than a mid-range interest rate on a four- or five-year loan, as the added time gives the accrued interest more time to gain interest.
How to Balance Interest Rates and Finance Terms
There is no right answer as to whether a long-term, low-interest loan or a short-term, higher-interest loan is better; it always depends on your personal finances. While a short-term loan with a higher interest rate might cost more in the long run, it may also be more feasible if you are living on a month-to-month budget.
These are questions you should always ask with regard to your loan:
- What is the interest rate (APR)? – Even if you aren’t confident in doing the math on how much this will cost you, it’s an essential question, and lower rates can mean lower payments.
- How long is the loan term? – The “term” of a loan is how long of a period you have to pay the money back, in equal monthly payments.
- How much will I pay in interest over the life of the loan? – The interest rate and the loan term combine to determine how much you will pay over the cost of the vehicle and any taxes. A finance advisor should already have this number calculated out or can calculate it for you.
- Can I adjust the APR or the loan term? – Many loans have adjustable terms; don’t be afraid to talk budgets with your finance expert and remember to ask those same questions again about how much you will pay in interest.
If you aren’t sure of the answers to any of these questions, don’t hesitate to speak to a member of our finance teams; you can even apply for financing online from Indy Car Financing and we can go over all of the different options and what a different loan term or interest rate can mean for your budget.
Contact Indy Car Financing to Learn More about Low Interest Car Loans Today
If you want to learn about how to get a low interest rate on a car loan near Speedway or Indianapolis, we want to help. Contact us online or give us a call at (866) 950-6810 with any questions so that we can get you started on the way to driving home your next car.