Saving Money on Car Loans -

Saving Money on Car Loans

How You Could Be Saving Money on Your Car Loans

If you are planning to buy a car, consider applying for a balloon repayment instead of borrowing the full amount of your car. A balloon payment is a lump sum amount made at the end of your loan period, as against a down payment made at the beginning. For example, if the full value of the car you will buy is at $30,000 with a balloon payment of $5,000, your total loan will be $25,000 payable, for example, in five years. You will then pay the remaining $5,000 at the end of the fifth year. This translates to lower interest cost.

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Alternatively, if you are planning to make a down payment on your car, you can invest the amount in a mutual fund and redeem it at the end of the loan to pay off the balloon payment. This saves you on interest and earns you a little extra money from the investment.

You can find more information on balloon payments here.