When shopping around for car loans, you’ll likely come across the term fixed rate auto financing. This is different from a variable rate loan, where the interest percentage can change based on the prime lending rate. If you are looking to finance a vehicle â€“ like from Skaha Ford in BC â€“ a fixed rate loan is often your best choice.
What is a Fixed Rate Car Loan?
Fixed rate auto financing is when the interest rate is secured for the entire loan term â€“ meaning, the rate you pay for the first month of your loan will remain in place until your vehicle is paid off. If the Canadian prime interest rate goes up or down, it won’t impact your payment or fluctuate your cost of borrowing. It is a predictable amount that remains the same throughout your entire term.
Fixed rate loans are also easier to budget since your payment amount is predetermined and will not change unless you refinance. By making regular, on-time payments in full, this type of car loan can even help you improve your credit score and unlock other financing opportunities in the future.
Curious to see how much you can be approved for? Our Easy Deal program at Skaha Ford simplifies the process with our free online credit approval. Apply today to learn more!