What a car loan costs you

It’s tempting to buy a new car, whether it’s an upgrade, a first car, or another car for the family. Whatever the reason, a car loan makes the purchase easier. Auto loans typically last three to five years, but some lenders may also offer loans for up to seven years. A longer loan can mean smaller equivalent monthly payments (EMI), which makes the car more affordable, but overall you pay more interest. Remember that a car is a depreciating asset, so taking out a larger loan may not be the best thing to do. But if you take out a car loan for a short term, EMIs will be heavy and non-payment will mean a stain on your credit report. Conditions also apply to the loan amount. For example, some lenders will lend for the full ex-store price of the car, while others may lend up to 80%. Besides the interest rate on a car loan, also take a look at the applicable processing fees and other fees.

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