Points to Know About Car Loan

• A car loan is a way for you to purchase a new or used vehicle.
• You borrow money from a lender and pay them back over time, usually with interest.
• The amount you borrow is called the loan principal.
• Car loans almost always include interest, which is how lenders make a profit on the money they lend you.
• It is easy to get excited at the prospect of owning your dream car on installments, which is a fraction of the actual price.
• The more you borrow the more interest you pay over the loan term. The longer the term, greater the interest you pay over the loan term.
• Do understand that car loans are short tenor loans. As the loan tenor goes down, the impact of interest rate goes down significantly.
• A car is a depreciating asset. This means the value of a car goes down as it gets older.
• Car loans are typically available as fixed rate loans. And banks can charge prepayment penalty if you try to prepay a fixed rate loan.