Searching for the best car financing deal isn’t always the most cut and dry process. There are a number of different kinds of loans out there and that alone can be pretty confusing to navigate.
And then there’s the option of whether you want to go with a car loan that offers a fixed interest rate or variable interest rate. As this isn’t really a subject that’s addressed very often, we thought it’d be useful to explain what each of these are to help you make a more informed choice when it’s time to do so.
Watch the below video where we have explained key differences between fixed and variable loans, highlighting the advantages and potential risks associated with each option.
Fixed interest rate car loans
A car loan that offers a fixed interest rate means that for the entire length of the loan term you’ll be paying the exact same repayment every time because the interest rate doesn’t change at all.
One major benefit to this is for budgeting purposes; you know it’s always going to remain the same so putting together a budget is much more straightforward.
On the other side of the coin, though, you may find that a loan package offering a fixed interest rate can include penalty fees should you decide to pay the loan out early.
Variable interest rate car loans
As you may have guessed by now, variable interest rate car loans have a rate that can fluctuate throughout the life of the loan (at the lender’s discretion).
Although you might save on early payout fees that you’d otherwise be paying in a fixed loan agreement, this can be offset by the varying interest rate you’re paying against the loan amount.
It’s important to note, though, that variable rates can end up being lower than their fixed counterparts intermittently depending on the market and lender.
Which one should I choose?
There’s really no ‘one size fits all’ solution when it comes to car loans. Everyone’s circumstances are different, so be sure to take everything into consideration when making your decision. We can provide expert guidance to help you make the right decision - call us on 1300 787 288 for a chat.
Find out more about interest rates by calling us today
If you’re ready to take the next step, you can discover what your monthly estimated repayments may look like by using this car finance calculator and apply online in as little as 5 minutes!
Still a little bit confused by interest rates and which would work best for your individual situation? The team at Stratton Finance have a huge amount of experience helping Aussies like you find the perfect car finance package.
Call us now on 1300 787 288 if you have any questions for us or if you’re after some additional information. Alternatively, message us online and let us know what you need assistance with and someone will be in touch ASAP to help.