Are you one of those persons who depends on your car for almost everything? Driving your kids to school, going to work, shopping for groceries and even for visiting your parents living ten blocks away? If you felt described with the last paragraph, you definitely depend on your car.
If it is being difficult to maintain your vehicle and you have decided to buy a new one, you may want to know a few things about auto loans before changing your car.
What Kind Of Car Can I Buy With A Car Loan
There are many options related to what can you buy. It does not matter whether if your dreamed car is brand new or has already been owned by someone else. It all depends on the amount of money you want to borrow and if your credit score and/or your lender allow you to borrow the requested amount.
What Options Do I Have In Car Loans?
There are two different kinds of car loans, you can apply for a secured car loan, which will require you to put a collateral as a repayment guaranty. Or, you can decide to take an unsecured car loan.
In both cases, terms and conditions depend on the lender you chose. There are some lenders that will require you to put a part of the money to be approved, and others will accept to finance the %100 of your desired car. You should compare your options and chose the one that suits best what you are looking for.
Secured Car Loans
As other secured loans, these loan kinds require a collateral. The purchased car plays this part in most of cases. The idea of having a collateral lows the risk for the lender in case you don’t fulfill the repayment.
As the borrower, you will be favored with lower interest rates and also it would be easier to obtain full financing for your purchase if you chose to apply for a secured loan.
Unsecured Car Loans
Unsecured car loans are no other thing than personal loans. Equal to these ones, unsecured car loans are based only on the applicant’s credit score. Unsecured car loans carry less risk for the borrower since there are no tied collateral. In the other hand, this implies that you will not be able to obtain a high amount of money if your credit score is not good enough.
Where Can I Obtain My Auto Loan?
There are two ways to obtain a car loan. Direct and indirect, in the direct auto loan, a bank or financial institution, acts as a lender and negotiates directly with the consumer. The other way is through an indirect auto loan. This is when a car dealership plays the role of an intermediary between the financial institution and the consumer.
If you have already visited a car dealership and have decided to get your car’s financing through the dealership, you will have to fill in the forms at your car dealer’s office present the required documentation, and then wait for the approval.
If you are not sure of which lender would be better for you, just take your time to think about it and compare the options you are given to find which is best for you.
If you decide to go for a direct loan, you may also find your lender online and apply from your home just by filling in the forms provided by your chosen lender’s web site. Doing this will be faster than completing forms in an office. Besides, you will get a response on your approval almost instantly, and you will not need to present any documentation if you are turned down.
Remember to look carefully for your lender, if your credit score is not very good you will have to make sure that your chosen option suits your possibilities, talking about documentation to present, and repayment options, remember that there are many lenders that will accept a bad credit history, but they may have higher rates and or fees, so just take your time to make a final decision.