Owning a car of your dream is a reality these days. This is thanks mainly to car loan that is made available to each and every aspirant wishing to have a car of his own. The lenders have kept terms-conditions of car loans attractive for winning as many customers as possible in a tough car loan market, making the loan even easier to access. As per your requirements and as suits to your pocket, car loan is there for asking to buy either a new car or a used one. But before making a deal, it would be wise to have a close look of what is happening in car loan markets and what are basic aspects that one must be aware of in taking car loan.
One of the attractive feature of every car loan is that you do not have to look for a collateral is secured car loan is your option. it may be more beneficial if you can place any of your valuable assets like home as collateral with the lender. But if you do not like to risk home for the fear of its repossession, then the very car you intend to buy can easily secure the loan. all you have to do is to hand over the deal papers of the car to the lender who will return them after you have paid back the loan completely. In the meantime you can continue driving your car. But in case of payment default, you would be loosing car to the lender.
Secured car loan have this advantage of lower interest rates and if your home secures the loan, the rate of interest goes down. The loan amount depends on equity in collateral like home or the price of the car. While you drive the car, the burden of the loan is lesser as the car loan can be repaid in 5 to 30 years. Larger repayment duration means you can reduced monthly payment towards installments.
Tenants or non-homeowners however can opt for unsecured car loan. Unsecured car loan comes without the clause of collateral, making the loan a completely risk free affair for the car owner. As there are risks for the lender, unsecured car loan come at higher interest rate making it costlier for the borrower. Unsecured car loan is solely offered on the basis of financial standing of tenants or non-homeowner. Income and employment documents are required from the borrower for ensuring safe return of the loan. you will be approved smaller amount for a shorter repayment duration as unsecured car loan.
Do not worry about bad credit. In case of secured car loan, as lenders have the borrower’s property as security, bad credit does not matters much to the lenders. For unsecured car loan however income and employment documents are must for showing to the lender. But bad credit borrowers will be approved the car loan at higher interest rate. At the same time one should note that if car loan installments are regularly cleared, the borrower’s credit score goes higher and loan availing in future becomes easier.
Buy a car from a reliable car dealer and check it for mechanical defects and quality. Compare different car loan providers who have showcased car loan interest rates and terms-conditions on websites. Apply to the suitable lender online for a fast processing and approval of car loan. Make sure to pay off loan installments in time for escaping debts.