It is common practice nowadays that purchase of vehicles is coursed through financing. Either the car buyer applies loan from bank or other private lending companies. Of the different lenders, the bankrate car loan usually imposes lowest interest rate. Buying a second-hand car will still make you eligible to a bank car loan. However, the interest rate on previously owned cars is usually higher. The age and model of the car is another basis for loan approval. Too old cars, say over 5 years, may no longer be accepted as collateral for the car’s chattel mortgage.
What is chattel mortgage? This is the legal arrangement for a loan having a movable personal property for security to the loan. When you secure bank car loan, your collateral will be the vehicle that is financed by the bank or lending company. Once the full payment is made, the mortgage will be cancelled and you will have full ownership of the fully paid vehicle.
Bankrate car loan amortization
When your bankrate car loan is granted, you will pay your loan in equal amortizations. In most cases, the loan payment is on monthly basis. However, some lenders provide different schedule on a case to case arrangement. There is a mathematical computation for the amortization. The payment schedule is based on a table containing the details of the bankrate car loan. This will include partial payment of the principal or the total amount financed plus interest. In short, the amount of your periodic payment or amortizations for the bankrate car loan will be based on the principal, rate of interest and the term of the loan or duration until full payment.
You will notice that your payment for the first few months will mostly go to interest. Only a small part is deducted to your total principal. But as you near the end of the term, this will be reversed and most of your payment will be applied to your principal loan. The amortization table shows your new principal balance after each payment. And should you decide to liquidate your loan in full, you will know from the table your total outstanding principal balance.
How to calculate your auto loan amortization
Before you finally make a decision on the bankrate car loan, you can make an advance estimate of your periodic payment. If you search the internet, you will find many websites with Excel templates that have online calculators. You will know your loan payment schedule by filling in the boxes for loan amount, rate of interest, term of the loan, payment frequency and initial or first payment. The Excel spreadsheet will calculate for you. From this same spreadsheet, you will reckon the effect of making advance or extra payments.
Leasing or car purchase with loans
If you are employed, your company may include car leasing benefits. If you opt for this privilege, you can also use the Excel spreadsheet to calculate the lease. This works for both leasing and loan payments.
You will then find out if it is better to lease or to purchase under the bankrate car loan. Depending on your financial situation, the mortgage calculator will make you decide – leasing versus owning through bank car loan. Do not hesitate to use the online calculators as they are free. This is a great guide to know if you have the capacity to pay a car of choice.
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