If you are like most U.S. consumers, an auto loan is needed to finance a car purchase. You can use a variety of loan types to finance an auto purchase. Generally, if you are approved for any loan type that provides the money needed to complete the car purchase, you should be able to acquire the vehicle. Due diligence is recommended before buying a car to ensure a thorough understanding of the loan terms.
Secured Car Loans
A secured car loan gives your lender a security interest in the vehicle. During the time your loan is outstanding, your lender will be listed on the title of your car loan. Using the title to create a lien against your car, the lender can repossess your car if you default on the loan terms. Because secured loans give a bank some leverage against risk, you may obtain lower interest rates than on unsecured car loans.
Personal Loans
Personal loans may be used to buy the car you want. Using a personal loan, you can pay for the car with cash. Buying a car with cash may position you to negotiate on the purchase price, as auto dealers typically provide incentives on financing or the costs of a vehicle. Having your financing in-hand when entering a car dealership might compel the sales manager to make a deal before you leave the showroom. You can apply for a personal loan with your bank; however, personal loans are typically unsecured and more expensive than traditional auto loans.
Financial Institutions
Financial institutions largely facilitate the financing that consumers need to buy a car. Comparison-shopping car loans from local banks, credit unions or online resources, such as edmunds.com or carsdirect.com, could enable you to locate attractive auto loans. However, if you prefer a one-stop-shop approach, most car dealerships will help you arrange financing through a network of auto lenders. Generally, you will need to complete a credit application, list your wages and the name of your employer before receiving a loan decision.
Dealer Financing
Some car dealers provide in-house financing that enables buyers to pay the dealership directly. Buyers who have financial challenges or bad credit could benefit from dealer-provided financing. Typically, smaller car dealerships, "buy here-pay here," as well as mom-and-pop types of auto businesses offer flexible credit terms for car buyers. Generally, the financing terms are not as competitive as bank-provided auto financing. Direct car payments that are made on time to a dealership could position you to acquire a more competitive loan on your next car purchase.
0 comments:
Post a Comment