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As with other types of loans, the overall cost of a car loan comes down to one major factor: the annual percentage rate. The APR includes both interest and lender fees, expressed as a percentage.
A $25,000 car loan financed over five years at a 4 percent interest rate requires a monthly payment of $460. You can use an auto loan calculator to do the math for your prospective loan.
Buying a car is a major financial commitment, and for most people, it involves taking out a loan. Along with the loan comes interest, which is the cost of borrowing money from a lender. Read Next:...
The borrower then pays off the financial institution the same as for a direct loan. [citation needed] Typically, the indirect auto lender will set an interest rate, known as the "buy rate". The auto dealer then adds a markup to that rate, and presents the result to the customer as the "contract rate".
The prime rate is used often as an index in calculating rate changes to adjustable rate mortgages (ARM) and other variable rate short term loans. It is used in the calculation of some private student loans. Many credit cards with variable interest rates have their rate specified as the prime rate (index) plus a fixed value commonly called the ...
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