Car loans or auto loans are by far one of the most popular loans and all the banks around the world offer these loans to millions of customers across the world. Owning your dream car is just a click away as now the car loans are even available online. Besides this, submission of application forms for car loans can also be carried out in the traditional way. The auto dealers also facilitate the processing of car loans by providing the right kind of loan assistance to all their customers.
Car loans are provided to borrowers who want to buy a new, old or remodeled car from authorized dealers and retailers. The creation of car loans has helped many people realize the dream of owning their own four-wheeler. It is amazing to note that major car loan providers have devised attractive terms and conditions to lure more and more borrowers. The car-loan market is highly competitive and all the major banks are jostling with one another to attract borrowers from all strata of the society. Customized car loans are available from leading financers, who have created unique auto loan plans to suit a variety of pockets. Loans are available for buying new cars as well as used ones – so the finance companies are covering all the car segments.
Prior to embarking on the journey of choosing a car loan, it is important to delve into the deeper aspects that would guide your choice. Car loans are generally secured loans i.e. you require to place collateral before availing the loan. You can either place assets like your house as collateral or you can put the very car you are purchasing as collateral. This is the most favored path as majority of the borrowers do not wish to put their other valuable assets at risk. Thus, in case there is a repayment related issue, the car itself can be seized to recover the debt. The car’s document is handed over to the lender in case the car is used as the collateral. Once the repayment is completed, the papers are returned to the car owner.
The interest on secured car loans is low if assets like a house are used as collateral – the equity of the collateral determines the interest rate. The repayment term varies from 3 to 10 years, so the burden seems to be too less from the borrowers perspective. Unsecured car loans too can be availed but the rate of interest is much higher and adequate income proof needs to be proffered. The repayment term is also shorter when compared to the secured loans.
Bad credit score does not prove to be a hurdle while securing a car loan as the secured car loans already use the assets as the collateral. For the unsecured loans too bad credit score hardly causes any problems – the only thing is that the borrower will have to pay a higher interest rate.
Securing car loans is easier with the online loan application coming into vogue. The borrowers need to just fill up an online application form and minimum paper work is required for availing the loan. It is advisable to do a little research and compare the quotes from various companies before signing on the dotted lines.