Low Interest Car Loans

Cars and automobiles have become the need of the present era. Owning and maintaining a car is an expensive affair so most of the clients resort to car leasing or applying for auto loans. The auto loans cover a wide range of aspects relating to cars and accordingly, the rates of interest also vary with the type of loan.

People are generally concerned with the rate of interest alone as they do not know much about the leasing process. In fact, the clients should worry about the type of loan that they should select and this would be giving them more benefits with minimum interest.

Interest According To Rule 78

This is the old method of calculation of interest but is no longer followed by the credit companies. The reason for the abandoning of this loan remains the higher rates of interest. In this method, the interest is calculated on the basis of amortization tables.

The amount of interest is further divided into each term of the loan with a view that the ¾ th of the interest is paid in initial installments. So it is a costly method for those buyers who are likely to pay back the debt before the due time.

Car Loans With Simple Interest Method

The most common method of the loan for cars is simple interest plan. In this plan, the interest is calculated on per day basis. If a client is going to pay back before the due date, the interest stops on the date of payment, and hence the client does not pay any extra amount. In addition, the calculations are very easy to understand and there is no ambiguity involved. The clients can escape the traps in the contract deed.

Loan Contract System

As per the law, the Rule 78 system for loans has been declared illegal for all loans exceeding 60 months, since 1992. Most of the states have removed the Rule 78 for loans under 60-month duration as well. So most of the lenders now calculate the loans on simple interest system but there are all the chances that your lender may try to calculate it on Rule 78. Therefore, you must analyze your contract deed in detail to avoid paying any extra money on account of interest calculated on illegal systems.

Recommended Interest System

After having analyzed the market for decades, we recommend that the clients must go for selection of the type of loan and the interest rate is secondary and will be automatically adjusted. The use of websites is a key element in determining the correct type of loan to apply for.


Paola Garcia lives in Jakarta Indonesia. She is an associate professor in University of Indonesia and also managing Scoopinion at the same time. She is also fond of watching theatrical plays.

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