How often is the interest on car loans compounded?

I was thinking of getting a car loan, but I want to make sure I know how much interest I'm paying. How often do lenders compound the interest?

That’s a smart move to think about interest before getting a car loan! Car loans use simple interest, which means you don’t have to worry about compounding.
Rather than paying interest on principal plus accrued interest, you only have to worry about paying interest on the principal. Therefore, you won’t spend nearly as much on interest compared to loans that compound interest.
Aside from your car note’s principal and interest, you still have to pay other expenses associated with car ownership. This means that you need to budget for gas, maintenance, a possible emergency fund, and car insurance. While you can’t control how much you spend on maintenance and gas in most cases, you can save money on car insurance.
Try using the number-one-rated car insurance app, Jerry, to help you save money. Jerry compares personalized rates from more than 50 top providers and delivers the best deals to your phone in minutes for free. The average Jerry driver saves $879 a year on car insurance!
Eric Schad
Answered on Nov 24, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.

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