Taking out the car loan only with a fixed interest rate ensures personal serenity in future interest rate developments. At the end of 2011, interest rates were at an all-time low. Anyone who now has a loan obligation, whether as a car loan or for other purchases, should have this interest rate fixed. The likelihood that the key rate for bank interest rates will fall further is practically zero. With regard to the inflation rate and the USD crisis, a rate hike should be expected.
The car loan with fixed interest rates – what effects does the key interest rate have on it?
A change in the key interest rate will no longer have any effect on the car loan with fixed interest that has already been taken out. The key rate is set by the Agree Bank. The base rate is the interest rate that banks pay when they take out loans themselves. This borrowing is necessary in order to be able to grant loans yourself. The key interest rate is currently 1.5% (as of Nov. 2011). If the key interest rate rises, the interest that a borrower has to pay becomes more expensive. This applies to all loans where the interest is not fixed.
When interest rates are high, it is therefore advisable to pay attention to flexible interest rates for loans. With a little luck, the interest rate will drop again and large interest savings can result. However, if the key interest rate is at a low, as is currently the case, then this good interest rate should be secured via the fixed interest rate. In the case of larger investments, such as house building, but also vehicle purchases, the fixed interest rate is always preferable to the variable interest rate. Only a fixed-rate loan creates the planning security that must be a prerequisite for long-term obligations.
The fixed-rate loan – security in times of crisis!
The car loan with fixed interest rate ensures interest rate security. Practically anything can happen on the capital markets, especially in the USD crisis. While discussions are still taking place in Germany, the crisis has long since reached other countries. The effects are also clearly noticeable there for ordinary people. Mass unemployment and rising interest rates on loans are the result. Austerity measures are choking the economy there, making the impact on people even more dramatic.
Nobody can see the future. Nobody has a panacea for Europe’s problems either. Every citizen can only do one thing, he can ensure future security for the credit commitments he makes. Anyone who takes out a car loan with a fixed interest rate ensures that there are no nasty surprises due to rapidly rising interest rates. The car loan with a fixed interest rate ensures the interest rate that is currently so favorable for the future. Hedging against interest rate risks is part of responsible future planning. The car loan with fixed interest rates creates this security.