In our blog, we often come with up remedies that are going to help our customers with car loans even if they suffer from bad credit score. They have the every right to know how a car loan works to make sure how they can get the maximum benefit out of them.
Today we are going to share the way car loan interest rates calculated, which may be important for our customer if they are thinking to make a car loan request.
Three things kept in tab while calculating interest rates shared here:
- Credit history is the first thing that lenders are going to check to determine the car loan interest rates. The credit history then transfers to the credit score that informs lender about when you are going to pay back.
- Next, you need to determine the interest rates that are of two types: simple interest and the compound interest rates. Simple interest calculated on the principal amount you owe while the compound rate of interest use both the amount and the interest rate you owe.
- Debt-to-income ratio is the calculation that foretells how much the consumers need to pay for their debts. In USA, the debt to-to-income is 28/36 for securing a loan.