What do you need to know about car finance?
What do the numbers really mean? Total cost and APR explained.
- The total amount that you pay back will include the cost of interest and any fees as well as the cost of the vehicle. It is important to make sure that you understand the total cost of your car finance/car loan.
- The cost of interest and fees is given in what’s called the APR (Annual Percentage Rate).
- APR is the only figure that includes all the costs involved, comparing APR will show you who is offering the best deal.
- APR is like golf, you want that number as low as possible.
- To make a deal more affordable, a lender may increase the repayment period.
- This means that you will pay more in total, but each payment will be smaller.
- To reduce you monthly and total payments, you can pay a larger deposit, this reduces the risk for the lender.
- Finally, the better your credit rating, the lower the interest rates you’ll be offered.
- You can check your credit rating at Experian Credit Expert.