Credit Basics
What is loan-to-value-ratio?
The loan-to-value ratio is a comparison of the loan amount to the value of the vehicle. The value of a vehicle can be found by consulting an auto industry pricing guide such as NADA or Kelley Blue Book.
Should I use a home equity loan instead of an auto loan?
Home equity loans are a great alternative to auto loans. You can get a lower interest rate with a home equity loan than you can with an auto loan. What makes it even better is that the interest you pay on a home loan may be tax deductible.
What is the difference between APR and the interest rate of a loan?
The interest rate on a loan is the cost in repaying the amount you borrowed, multiplied by a certain percentage that the bank charges you for the time it takes you to pay it back. The APR includes all the costs the bank charges you plus the interest rate and the amount of the loan. When comparing interest rates from lender to lender, you want to look at the APR.
Are there any costs for refinancing?
Typically, when you refinance, what you do is pay off the existing balance and then sign a new loan with new terms. When you sign this new loan, you again have to pay all the same costs you paid with the original loan. You may want to take this into consideration when deciding if you are ready to refinance.
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