Low APR Car Finance

When looking for your dream car, there is a lot to consider!

What are you going to be using the car for? Is it practical? Is it affordable? What are the running costs? The finance terms are one of the biggest considerations, as this can affect affordability. You should carefully look at the length of the loan and the APR. Low APR car finance does offer a lot of benefits, such as:

Reduced Total Cost of Ownership: Low interest rates translate into lower overall costs for the borrower, as they pay less interest over the life of the loan. This means more money for the fun things in life (or the responsible things, like building up savings).

Improved Affordability: Low interest rates make monthly payments more manageable. This allows a broader range of consumers to afford higher-quality vehicles or consider options they might not have been able to with higher interest rates.

Enhanced Flexibility: Lower interest rates often come with more flexible loan terms. This flexibility may include longer repayment periods, reducing monthly payments even further.

Less chance of negative equity: With lower interest rates, a larger portion of each payment goes towards the principal amount rather than interest charges. This means you can potentially trade in or sell the car sooner without negative equity concerns.

There are many reasons why you may not be able to choose a low APR option, such as:

Stringent Qualification Criteria: Lenders offering low interest rates often have strict eligibility requirements. This could mean that individuals with lower credit scores or less stable financial histories may not qualify for these favourable rates.

Higher Purchase Price: Some dealerships might compensate for the lower interest rates by raising the price of the vehicle. It’s important to look at the total you will repay over the life of the loan.

Depreciation and Negative Equity: Low interest rates might encourage longer loan terms, which can lead to the car depreciating faster than the borrower pays down the loan. This can result in negative equity, where the car’s value is less than the remaining loan balance.

Potential for Overextension: The allure of low monthly payments may entice buyers to select a more expensive car than what they can afford. This could lead to financial strain or difficulties in meeting other financial obligations.

Higher Deposit: Low APR car finance deals can be attractive, but the finance company may insist on a higher initial payment to offset the money lost from interest charges.

Low APR car finance deals can potentially save you a lot of money.

However, with any financial decision, there is a lot to consider before you decide if a loan is right for you. At CarMoney, our car finance ninjas will look at your individual circumstances before we present you with the lenders that are most likely to approve your application. That way you can easily compare loan terms.

Get a quote of contact CarMoney today.