What are Fixed Interest Car Loans?

Fixed interest car loans are common lending tools used to finance the purchase of a car. This type of loan is advantageous because it offers stability in payments over the course of the loan.

Advantages Of Fixed Interest Car Loans

Fixed interest car loans have several advantages for borrowers.

  • Payments are not subject to fluctuation – In fixed interest car loans, payments are generally broken up evenly over the life of a loan.
  • Lack of a prepayment penalty – In most cases, fixed interest rate car loans are considered simple interest loans. This means a borrower can overpay to accelerate the loan, without facing penalties for prepayment.

Other Options

Fixed interest car loans are not the only options out there. It is possible to obtain adjustable rate car loans, as well. This type of loan has interest rates that fluctuate based on market factors. Adjustable rates can be attractive when interest rates are low. They can, however, prove financially troublesome if rates rise and a car loan’s costs increase along with them.

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