Kiran Chopra
An auto loan is just like any other loan, and there are lots of options available in the market depending on the various factors. Finding the right one for you is not that easy as there are factors you must consider to ensure that the loan will comply with your needs and capacity to pay.
With the many types of loans to consider, you have the upper hand in finding the loan that is most suitable for you.
To help you get started, below are 7 of the top vehicle loans suitable for both good and bad credits
Secured Auto Loan is one of the most used types of auto loans. This is where the lender will secure the loan using the car as the collateral. In the event that the borrower fails to pay their four-wheeler loan on time, the borrower has the right to tow the vehicle.
Borrowers are fully responsible to make payments as agreed or speak to the lender if payment will get delayed to avoid towing issues.
If you are planning to get a commercial vehicle loan, unsecured auto loans can be a good option. Unlike secured, your vehicle is not at stake in the event of a missed payment. The lender will rely fully on the borrower’s commitment to pay their debt. But, lenders do not approve unsecured auto loans too easily as they need to ensure that borrowers are capable to pay their loan before approval.
Since there is no collateral involved, lenders charge higher interest rates with this kind of loan.
This kind of loan, on the other hand, will only charge interest on the outstanding balance of the loan. For example, you knocked down your *two-wheeler loan* from $200 to $100, the remainder of $100 will only accumulate interest.
This is a good loan to consider for people who assume to receive lump sum money in the near future, as it can reduce the amount, specifically the interest, they need to pay.
This is where the entire loan, including the interest, will be spread out evenly throughout the entire duration of the loan. For instance, you lend a $4000 worth of vehicle with a 20% interest payable in 2 years. The entire $4800 will be spread out to two years, leaving you with a $200 monthly payment.
In the event that you decide to pay more than your monthly payment, the interest and the amount to be paid will remain.
This is where borrowers directly contact credit unions, banks and online financing companies to get car loan approval. This is one of the most convenient considering that you can apply for vehicle loans online. By considering this option, you can get the luxury of choosing the best company to acquire loan. Choosing the one that gives easy and fast approval with low interest is recommended.
Borrowers considering this type of loan find more freedom to choose the car model and brand they wish to own.
This type of loan is where the borrower seeks help from the dealership to find an institution or a company to lend them money. Other borrowers find this option better because they do not need to go from one place to another to seek car loan approval. They will direct all their concerns to the dealership, including submission of requirements and payments.
Although convenient, one of the reasons why this type of loan is not as recommended as other option is the higher interest rate. The dealership may cut fees on the services they provide leading borrowers to pay more than they are supposed to be paying.
This is where the borrower is directly applying a loan to the dealer. Most of the people who have bad credits consider this option, as it is easier to get approval from in-house financing than any other type of loan. The downside of this option is the higher interest rate.
Not all dealership offer in-house financing hence you have to ask for this loan option’s availability.
There are many types of auto finance in India and choosing the best one for you is necessary. Seeking financial advice is recommended to ensure no action will be taken wrongfully.
