Auto Loan Servicing
Safeguard for customers:
Banks offer their consumer loans like automobile loans, housing loans, personal loans etc. through franchises/ marketing agents. The franchises are paid a fixed amount and a component of the interest which increases when the interest percentage is more then the bank defined prime lending rate (PLR) of auto loan servicing loans. The franchises sell these loans to potential buyers to maximize their revenue/return.
To maximize their return, franchises do not reveal the actual calculation of interest and other charges and it is not possible for most people to calculate the interest rate. This is also because the loan repayment is spread in small installments over a period. What the franchisee won't tell you is that initially a larger proportion of your payment goes towards interest and eventually the component that goes towards the principal amount increases. This happens because banks calculate interest on the outstanding principal and as the principal repaid increases the speed of repayment of loan increases as more and more of installment goes to reduce the principal.
As a potential customer, you can use the auto loan payoff calculator to safe
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guard himself from mis-information. Auto loan servicing loan calculators are available on the net and a search will enable you find quite a few of them. Most of them will have international currency as their base for calculation and if the currency your country uses follows metric system of measurement that is units/tens /hundreds you can substitute the currency symbol with your country currency symbol. (Without any variation in calculation)
If there is a variation in the installment amount being quoted and your calculations, you can ask the representative to clarify the charges levied like handling charges, processing charges, taxes, etc. Most of these charges are negotiable and once you recalculate with these charges your auto loan calculator figure will match that being quoted. With increased competition, car manufacturers and financiers are offering discounts to lure buyers sometimes it is possible your calculated rate may be higher than that being quoted as you have not factored discount. Even after factoring the discount, it is advisable to check the charges to see if something more can be bargained or reduced. A prudent buyer will need to recheck/ reclarify until your auto loan calculator figure and the quoted figure match. This ensures that you are fully aware of the various components of your loan.
There is no substitute for the professional services of your accountant but this calculator ensures that you are better prepared to get the right answers to your queries.
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