Fixed Rate Loans for Cars Explained

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January 27, 2012

Fixed rate loans for cars are auto loans in which the interest rates or APR cannot be changed according to the U.S. prime rate or "market rates." Most experts agree that these kinds of car loan terms are a good thing.

Some lenders have begun to offer an alternative called variable rate auto loans, but many report that these can carry a lot of interest if the interest rates rise during the period of the loan payback.

In addition to getting a fixed rate auto loan, it's a good idea to look for a low rate car loan, to keep the rates of interest as minimal as possible. By doing this, you avoid paying more than the car is worth over the period of the loan. Another goal is to keep the term of payment short, as the interest will not have a chance to build up to the same levels as it can with long term car loans.

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