Apr is the annual percentage rate. on a 30-year car loan, for example, apr does not include any of the capitalized interest that occurs each year.
instead it only calculates the yearly recurring investment rates.
so when you are calculating your monthly payment on an auto loan, make sure to factor in the total amount of interest paid over the length of time you are paying off your vehicle!
that way there are not any surprises or hidden costs at all! checking out what your current apr is before opening up a new loan will help give you a sense of how much money will be going towards interest versus principal–see which track sounds better for you! in general, low-interest loans should be looked at first as
what is a good apr for a vehicle loan?
an apr (annual percentage rate) is a measure of interest, and it can vary depending on factors such as the type of loan and the company you take out the loan with. the national consumer law center recommends that consumers look for an apr that's less than or equal to 16% annually.
they also recommend some tools that are more user friendly to go along with this information–i.e., talking about some credit scores, some background on private loans, types of auto insurance policies/things to check into before purchasing a car so you know what your best options might be based on any previous records you have had in the past – etc..
if there are any other questions regarding taking out a car loan specifically please ask
how do you calculate interest on a car loan?
if someone is financing $10,000 over 7 years to buy a car for $20,000 and they can afford the monthly payment, then they should use this formula:
p = amount financed (i.e., 10,000)
pmt= monthly payment (i.e., 300)
t= number of months in loan term-time loan period (i.e., 60 months)
fv= fractional value allowed as down payment or equity interest rate interest rate (% per annum)—must be calculated using the following equation:
(((1 – 0.0075)/12 – 0)/11 + 1)*1 = 3% apr; but we're rounding
does apr go down on car loan?
yes. the apr usually goes down when a person can demonstrate a stable income and lasts six to twelve months without chargebacks.
the major factors in apr going down are comparable with what you would find when looking at other types of loans – it is simply the interest rate being lowered based on the borrower's profile. some lenders only offer specific interest rates or aprs for certain periods, which may be temporary or permanent, so this also needs to be considered in addition to how long you will have the loan before you make your decision between different offers for financing credit cards, personal loans, etcetera.
