Auto Car Loan

Used cars are not as easy to finance as new cars. Lenders are more hesitant of financing vehicles with unknown pasts. However, you can find reasonable rates on auto loans by lining up your financing before you go car shopping. A down payment of 10% or more, plus shopping with a car dealer can also improve your rates.

Get Financing First, Then Car Shop

Pre-approved auto loans have a number of advantages. First, you find out what you qualify to borrow before you get stuck in a contract. You can also play around with loan terms to find a reasonable monthly payment. And sellers are eager to close a deal with a buyer that has secure financing.

Used cars loans often require a slightly higher rate, usually .6 or more, than new car loans. However, rates vary widely between lending companies, so it pays to shop around. Processing your loan before your car purchase relieves you from the pressure of signing with the first lender you find. It also saves you money in lower rates.

Plan On 10% Down

10% is most often required for a used car loan. It signals to the lender that you are investing in this purchase and are willing to make payments. A larger down payment can improve rates and offset low credit scores.

Another way to save money is to choose a short term loan. Since a used car probably won’t last as long as a new car, five and three year loans make the most financial sense. You save on interest costs and can start saving for your next car. Continue Reading

Most consumers who buy a car will need a car loan as the price of a car can be quite high. Certain branded cars are even more expensive which are not in everybody’s budget. Hence, if there is not enough savings or if the available funds are to be saved for a rainy day, it is best to get car loans. There are many car loans providers in the market today. These are called finance companies.

Loan Procedure

Finance companies will finance car loans on new or used cars. There is a deposit to be paid upfront when a car is purchased; the balance will be financed through an approved with the finance company.

Some finance companies may offer a 100% deal while others offer 70-95% loans on the total car price. Hence, a down payment or deposit is usually required. If a 90% is allowed, then the down payment is 10% of the car price. There is an interest rate charged on the loan amount; hence, the smaller the loan amount, the lesser interest will be incurred. And the longer the period, the more interest will be incurred.

There will be a fixed repayment amount to be settled promptly every month for a stipulated number of years. When that period is up, the car owner can have complete possession of the car.

However, if the loan borrower defaults on the repayments, the finance company holds the right to pull back the car and auction it off to recoup its losses.

Nature of loan deal

Most car loans are considered secured loans where the vehicle is pledged as collateral to ensure the full repayment of the loan. It is easy to secure a car if the borrower is working. His job is an indication of his repayment capability. If the borrower does not have a job, he will need to resort to unsecured loans which impose higher interest rates. Unsecured loans have other stringent conditions; one of which is a shorter repayment period. Continue Reading