A quick look at the terms and conditions of auto loan agreements shows how much is often less than what you’re actually paying on your loan.
Here’s a breakdown of some common auto loan agreement terms and what they mean for you.
Short term loans: The longer you borrow, the higher the interest rate you pay on the loan.
The more than 60-day loan term is usually a minimum of 5.5 percent.
That’s a little more than the typical five-year term of auto loans.
For example, if you have a three-year loan with a $100,000 principal balance, the rate you’re paying on the short-term loan would be 2.5 to 5.25 percent.
The rate on the longer-term car loan would likely be higher, as would the loan-to-value ratio.
If the two are more than one-third, the short term loan may not have the same interest rate, but the higher interest rate on your short- term loan will likely be a factor in your loan’s price tag.
Car loans: You have the option of choosing whether to have a one-year or two-year auto loan.
If you choose a two- or three-month loan, the loan term will be set by the manufacturer of your vehicle.
For vehicles that use the engine, the length of time your vehicle is on the road will determine how long you’ll pay for your car.
If your vehicle has a long history, such as being owned by a long-term care facility, you may need to pay more to get a longer term loan.
Home loans: Home loans have a much shorter loan term.
A five-month home loan is typically between three and seven years.
That means you’ll usually pay less than a five- and six-year car loan, even if you choose to pay a lower interest rate.
But remember that the interest you pay will be calculated as a percentage of the loan amount, so if your loan is more than two years old, you could pay a lot less on your home loan.
Car insurance: In many cases, a car insurance company will provide you with a written car insurance policy with a guaranteed payment amount.
That amount could range from $1,000 to $5,000, depending on the policy you choose.
If car insurance doesn’t come with a guarantee, you should be prepared to pay the full amount, but be prepared for the terms to vary from company to company.
Cash advance: Cash advance is the process of getting money from your bank account, and is an important way for you to make payments on your car loan.
Cash advances are usually charged based on the length and type of loan you have, and you may be able to take out as much as you like.
Some auto loan companies will charge cash advances of as little as one-tenth of your loan balance.
Some other companies may charge an additional amount depending on how long your loan has been outstanding.
Credit cards: Many credit cards can come with auto loan interest rates that range from 2.25 to 5 percent.
If a card has a 3.25-percent interest rate and you pay it off in less than three years, your credit card company will be paying interest at a rate of 5 percent, even though you are paying the full balance of the card on your mortgage.
Auto insurance: If you’re looking for a longer-than-average term auto loan that’s guaranteed, you can consider having your auto insurance company provide you a higher interest payment.
A guaranteed rate of 2.75 percent is standard for many auto insurance companies.
Credit card fees: Some auto insurance providers charge a fee for processing your credit check.
The amount you pay depends on how much money you make and how much you owe on the card, and the fee can vary.
Credit monitoring fees, like that charged by Wells Fargo, can add up to 10 percent of the amount you make on your card, according to the credit bureau.
Insurance: If the interest on your auto loan is higher than the rate on a standard mortgage, you’ll likely have to pay higher insurance premiums.
A standard car insurance rate typically ranges from 2 to 5 to 3 percent.
For auto loans with a higher insurance premium, such a rate could be 10 to 15 percent.
But don’t worry if you pay your premiums on time.
A higher premium could mean you’ll have to spend more on insurance coverage.
Repayment terms: Repayments vary from one lender to another.
Some lenders offer a grace period on their loan terms, which is meant to allow you to pay off your loan over time, without any interest.
But the time between repaying your loan and paying off the interest is a significant amount, and there’s a good chance you’ll be unable to pay it back in full for years