To know the answer, you first have to know what does the interest rate and related fees depend on for a car loan. Here are the main factors:
- Minimum down payment: The minimum initial amount the customer should pay in the beginning.
- The loan period: The maximum number of years allowed for the customer to pay back the loan.
- The amount: The loan value.
- Car Age: New or Used Car and how old it is.
- Car Type: Korean, German, Japanese, French, Chinese etc.
Another important thing you must now is that Lebanese banks charge flat interest rates on car loans. A flat means that a bank in Lebanon charges you interest on the initial amount of the loan during all the loan period. NOT on the remaining amount you have to reimburse. Also note the most car loans in Lebanon are only in granted in Dollars.
Now here’s how the flat rate on your car loan varies with the factors above:
- Down Payment: A higher down payment means a lower interest rate and vice versa.
- Loan Period: A longer loan period means a higher interest rate.
- Loan Amount: A higher loan amount, sometime means a higher interest rate.
- Car Age: An older car mean a higher interest rate.
- Car Type: Some banks is Lebanon charge you less interest if you are buying a more valuable car (German or Japanese).
To see things more clearly, think about it this way: The more risk there is that you can’t reimburse the loan and the bank makes losses, the more interest the bank will charge you.
For you to know if your bank is charging you too much on your car loan in Lebanon, take a look at the table below showing you minimums, maximums and averages of the factors below. (Loans in USD are considered as of March 2014)
But be careful, the interest rate is not the only cost that banks charge you on your car loan in Lebanon. There is also the insurance cost! Sometimes the bank lowers the interest rate but makes you pay a very expensive insurance, so you end up paying more than you think! We will be telling you more about this in a new article soon.
When you head to a bank to apply for a car loan, the bank should display a full simulation of your car loan. The amount you are being lent is of course specified by your car choice. You can decide on the down payment and loan period (in most banks). According to the simulation and prices, you would then choose the best combination that suits you.
Visit bnooki.com to compare and simulate car loan packages among banks in Lebanon.