Here is a question asked by many first-time car buyers.”Should you get car finance help with a first purchase or any car purchase? The fact is that there are different types of car financing available. Certainly, the type of financing that is appropriate depends on a car buyer’s financial background and credit history. It is suggested by financial experts to take a close look at your personal financial situation before even considering car financing sources available. This will help guide you to the type of loan that is right for you.
Types Of Car Financing Loans
Dealership Loans – Do you have bad credit, no credit history? Well, this is the type of loan that you might qualify for and it is one of the least agreeable car finance loans around. The dealership will supply the loan and you pay the dealership each month, which is good for the car buyer with bad credit. However, interest rates are generally quite high compared to other loans.
Bank Loans – This is a common type of loan available to a borrower with good credit. A financial institution loans the individual the amount of money required for the car finance loan before purchase. Usually, the interest rates on the loan are much more agreeable. They simply agree to make payments to the financial institution in a timely manner.
Unsecured Auto Loan – Only those with a good credit history manage to secure this type of car finance loan. No collateral is required to be held for security. The lender relies on the purchaser’s good credit history and his ability to pay off the loan as faith that the money will be paid back in a timely way.
Secured Auto Loan – This is the type of loan that is generally available today to the average consumer. The borrower agrees to make payments in a timely manner to the lender. If the borrower does not pay back as agreed upon, the lender has the right to repossess the vehicle.
It should be noted that not following the car finance loan agreements above will negatively affect the borrower’s credit history and ultimately their credit score.