Before that actually you can calculate your loan by using car loans calculator. This car loan calculator is used to calculate monthly loan repayments. Auto loans or car loans, like other loans, can help you financially when you don’t have enough money. If you don’t have enough cash on hand to finance a new car, a loan can help you buy a car that cash alone can’t buy.
What is a Car Loan? A Malaysian car loan is a type of loan that granted solely for the purchase of a car by an individual. By using this loan you will bounded by a formal written agreement. In which the borrower agrees to pay the lender. In addition to the amount of the loan, the interest for a certain period of time increases. If the person does not do this within the stipulated period, the lender can seize the car.
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Basic Car Loans Terms
- Interest Rate: This is the overall cost of taking out a loan. It depends on the base rate that is provided by the bank, which can go up and down depending on the country’s economy.
- Down Payment: The upfront payment for the car that covers part of the cost. It is usually 10 percent% of the total cost for new cars and 20 percent% for used cars.
- Margin of Finance: The proportion of the car’s cost that the bank will lend to you. Basically, this refers to how much the bank will be financing or forking out for your car’s cost.
- Loan Period: The total amount of months or /years taken to pay off your loan.
- Installment: The amount that you need to pay monthly to the bank to clear off your loan.
- Guarantor: Someone who is bound legally to pay off your loan if you are not able to do it.
- Repossession: The lender (bank) takes away the car from a borrower when the latter fails to service the car loan installments in two consecutive months.
Things To Look Out For When Applying For A Car Loan
- New or Used Cars
Logically, banks charge higher interest rates for used cars than for new cars. Used cars have a low resale value and it is difficult to predict what a car will be worth in a few years. Some banks set a vehicle age limit (up to 12 years) for people planning to buy a used car.
Click Here For Saving Money? Why Not? - State-owned vs non-state
Banks charge lower interest rates on non-state cars like Toyota and Honda compared to state cars like the Proton. However, there is one small difference that should not be top of mind when choosing which car to buy. - Short term versus long term
Banks charge lower interest rates for the long term than for the short term. Ideally, choose a shorter loan term if your monthly repayments fit within your budget. - Get a pre-approved loan
Getting a pre-approved loan will give you an idea of how much you can afford. Go to several banks and ask what interest rates and loan amounts you can borrow based on your credit history. Better yet, use our handy comparison tool to find the best fit. Car loans vary from bank to bank, so compare as many as you can. - Loan Range
Banks may offer lower interest rates if you choose a lower loan range. If you can afford a large down payment, you can save even more on interest. - Dealers vs. Banks
It is common for your car dealer to arrange a car loan application on your behalf. That would be the easier option. However, there may be hidden fees that are not in your favor. Always do your research beforehand and compare which bank or auto dealer offers the best deal. - Think Before Paying Off Your Car Loan Early
If you can afford it, paying off your car loan in full is a good idea. However, there may be scenarios where you can get more by investing your money in income-generating funds . For more information about car loan early repayment, see Do You Need to Pay Your Car Loan Early? - Islamic and Traditional Auto Loans
There is a difference between Islamic and traditional auto loans. To learn more about the differences between the two, read our article on Islamic vs. traditional loans to help you decide which type of loan to take. - Fixed and Floating Rates
Bank offers two types of interest rates for auto loans:
Fixed Rate and Floating Rate. For the most part, fixed rate loan types are the most popular choice due to their market offering and stable monthly repayments.