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Before we learn about the Annual Percentage Rate on our Car. Let’s learn about the APR and Interest Rate.

This is a very common question asked What is the different between Annual Percentage Rate vs Interest Rate? This question can sometimes be very complicated and can sometimes be very easy for you understand, what you will be paying on your Loan. This includes many different factors like Originated Fees, Mortgage Fees, Car loan fees and much more.

Banks often claim the same or a lower interest rate on your car but this doesn’t mean that you will have lower interest rate. Banks impose multiple different fees to increase their profit.

As mentioned above you will have different fees with the interest which you should always consider before accepting the loan.
Let’s take an example If company A offering you 6% of interest rate and company B is also offering 6% interest rate on the car loan then you should always check the additional fees.

Company A might be charging you \$100 originated fees and company B might be charging you \$500 of originated fees. In this case you Company B will not really be the ideal company to go with.

## Interest Rate

Interest Rate is the cost to the borrower as percentage on an annual term. In simple terms Interest Rate is like Rent on the money are lending from the bank. There can fixed Interest Rates as well as Floating Interest Rates which will increase with the term of the loan.

#### Fixed Interest Rates

A fixed interest rate is the amount that you will pay on the borrowed money. This interest will typically remain the same throughout the term.

For example: You take a loan of \$200,000 for the tenure of 5 years on 6%. Then you will be liable to payback \$212,000 to the bank in the course of 5 years or 60 months.

Your Monthly repayment will be 3,533.33 for the next 60 months including the interest rate which will be \$200 a month.

Before accepting such loan do read the terms and conditions of the company so that there are no hidden charges and late fees. This is very common that companies have different fees hidden with the loan.

#### Floating Interest Rates

A floating Interest Rate changes up and down with the rest of the market along the Index. The change depends on the the type of loan and its security. The more insecure the loan is the more interest it increases. It also involves late fees or any additional fees regarding the transaction.

## Annual Percentage Rate

Annual Percentage Rate refers to the annual interest rate generated on the borrowed amount. It is Expressed as percentage for the whole year including any fees or additional costs. It does not take compounding into the account.

#### How is APR calculated?

An Annual Percentage rate is considered as Interest on the principle. Based on the the entire year the bank calculates the APR including every single penny that you will be pay. We have added the simple formula for you to understand the APR calculation.

Now that we know about the Interest and APR. Let’s move to the Annual Percentage Rate on a Car.

## What are car loans?

Car loans are the secured loans. The bank will have your car as the collateral incase if you are not able to payback the bank will take the possession of the car. The bank is the owner of the car until you repay the loan with the interest and defined terms.

Because these loans are secured they come with less interest as compared to Bad Credit Loans. The average APR on a Car loan can vary from 3.24% to 13.97% based on the credit score you have.

### Credit Score

Always check your credit score before requesting for a loan because many different checkers give different results. This also helps in lowering down the APR. If you have a bad credit then try paying a down payment. This will likely decrease the APR because of the trust you will gain.

## Car Loan Provider with good Annual Percentage Rate

### Auto Loan Zoom

Auto Loan zoom is a broker that connects you with many different Lenders within USA. They have a very wide range of network of lenders who offer loan for any credit.

You will just have to fill out a simple form and Auto Loan Zoom will send you application to their network securely.

Benefits of Auto Loan Zoom

1. It is free of charge to use.
2. Best of Auto Loans
3. Transfers the funds as soon as next day.
4. Secure and safe method.
5. Wide Network of lenders and Dealerships.

The Annual Percentage Rate on your car will vary based on the credit score you have. You will be offered by many clients. Before accepting a loan for a car please read the instructions very carefully for every lender. This will benefit you while finding the best lender.

## Things to know before applying for an auto loan

While looking for a car loan. You should consider checking 2 to 4 car loan lenders before you decision. Because every lender will have their own terms and conditions which will have impact on your loan.

The biggest factor for your loan will be the Credit Score. The higher credit score you will have the lower Annual Percentage Rate you will receive on your car. This might also lead to higher loan and wider range of loan repayment methods which are very essential.

### Lower Annual Percentage Rate on your car

To get a lower annual percentage rate on your car, make sure you check all the terms and conditions of the lender. Compare different lenders with one another. If the interest is 6% for the entire then that doesn’t mean that it is better. It can have originated fees higher than the other lender and the interest rate will increase significantly.

Have a good credit score or if you have a bad credit score then try to repair your credit score. (Click Here to Repair Credit Score)

### Common requirements for a car loan

• You must be 18+
• You need to provide a valid phone number.
• A valid email address is required.