Auto Loans

Having a private vehicle has a series of indisputable advantages. Yet not all can afford to pay a large sum of money for buying one. Here auto loans come to help. But what are they? How do they work? What are the dangers of going into a debt for a car? Find out answers to all these questions and more questions right here right now.

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The essence of auto loans

In case you need to buy a used or a new car, you can get the money for it with an auto loan. The latter is provided by auto loan lenders on certain terms and paid back with installments. Every payment involves as the fees and the charged APR, so a part of the amount borrowed.

Auto loan types

There are three major types of auto loans:

1.     New car loans. Here the borrower either applies for money and takes it to the service his preferred car is sold at or takes the loan right at the auto dealer's place. Everything depends on the latter.
2.     Used car loans. If you intend to buy a used car, first find it, as you’ll have to provide the loan lender with the make, model, and the VIN number when borrowing the money needed.
3.     Refinancing car loans. This loan type is designed for those who are already paying an auto loan yet find the rates are high. If they find auto loans offered at lower rates, they may apply for a refinancing car loan.

Get an auto loan

Hinged on the auto loan type you need to get, there are several ways of finding the money needed:

1.     In-person. As lenders operate through online services and physical departments, there’s always a chance to apply and get the money in-person.
2.     Online. Applying for an auto loan online is highly convenient and has its advantages. First, if you apply for a pre-approval to a bank, credit union or a private online lender, you may find out what amount you’ll be provided. Only afterward you can go to the auto dealership and negotiate on the car's price you want or make your choice within the limits of your budget.
3.     At the dealership. Getting a car loan right at the auto dealer is another option. Yet, here you need to be aware that the too-good-to-be-true sounding offers, like whether 0% interest rates are actually just that. The auto buyer may save money on the interest, yet the car will be sold to him at a higher price. The dealer will, by all means, get his profit!

The price of auto loans

The price of an auto loan is calculated by adding the fees and the APR charge added to the loan amount. To learn the exact amount of money you’re to pay monthly, get acquainted with these important aspects:

1.     The APR (all fees and interests) and the interest rate (the percentage of the principal amount)
2.     Rebates
3.     The loan term

Auto loans for bad credit history

People with bad or practically no credit history still can apply for auto loans, as there are certain lenders who don't consider it obligatory. Instead, the bought car can serve as a security for the loan.

Citizenship and auto loans

The question whether it’s mandatory for the applicant to be a US citizen for getting a car loan bothers numerous people. Actually, there are lenders who provide loans to any US resident or nonresident. Find one and apply.

Refinancing auto loans

With today's highly competitive market, many lenders offer refinancing auto loans. If you find out a certain loan provider offering lower repayments and better rates, why not apply to refinance your old car loan?

Auto loans: car dealerships restrictions

The greatest part of auto loan providers suggest no restrictions as from where the new car must be purchased. Yet, there are some that work with a network of concrete dealerships. Therefore, before you hurry to apply to a lender, check out this point.

Pre-approval duration

After an applicant gets a pre-approval, in most cases it’s valid for about 30 days. However, everything depends on the lender's policy.

Leasing vs. buying a car

Quite a few drivers tire of their vehicles too quickly. If you belong to the category of people who need a new model every two years, why wouldn’t you consider leasing a car? For such cases, this is a grandiose option! Repayments for a leased car are much lower than those for a bought one, yet you need to take into account that you never become the owner of the car. Even after several years (you’ll have managed to change a couple of models and fulfilled numerous payments), you’ll factually stay empty-handed.