A car may be one of the most necessities for your jobs. In many careers, taking a bus is simply not an acceptable option. You will need to have a reliable transportation. Unfortunately, many people just can not afford to pay for a car as a lump sum. In this type of situation, a secured car loan may be a great solution. A borrower can fulfill his need with little pressure of loans.
Borrower can use any asset like house to obtain secured car loan. In many situations, car that is being financed can be used as the security. For instance, the lender may keep the papers of the car to approve the loans. When the borrower can pay back the loan, the papers are returned to the borrower. In most cases, the amount of loan will usually be below the price of the car. Therefore, it is important for the borrower to know the price of his dream car, the value of the collateral, his repayment capacity before taking the loan. Generally, secured car loan are expected to be returned in five to seven years.
Car loans are usually secured loans. The car which you buy is offered as collateral. In case you fail to default in repayment, the car may be repossessed by the lender. A car loan offers you all the benefits of a secured loan. The rate of interest is lower than the rate on unsecured loans. As a result of low rate of interest, the monthly installments are small. Lenders offer flexible repayment terms on secured car loans. Approval of secured car loans is fast and easy. It is not difficult to avail a bad credit car loan since it is a secured loan. The rate of interest on a bad credit car loan is higher than the rate on other car loans.
You may also use your home as collateral to obtain a car loan. Such a loan is known as a homeowner’s loan. Homeowner’s loan is also a secured loan and so the rate of interest charged on such a loan is low as compared to the other car loans. A personal car loan can also be availed to buy a car. A personal loan can be availed for any purpose. Personal loans can be secured as well as unsecured.
Types of Car Loans
There are two types of car loans
1. Car Loan With Variable Interest Rates
2. Car Loan With Adjustable Interest Rates
1. Car Loan With Variable Interest Rates – you’ll probably be able to deduce what a car loan with variable interest rates already means. With a car loan of this kind, you and your car loan provider agrees to have the interest rate change during the duration of your contract or until the car loan is paid in full.
2. Car Loan With Adjustable Interest Rates – A lot of people criticize this type of car loan because it’s purportedly unfair to individual consumers. A car loan with an adjustable interest rate means that for a certain portion of the term (time period) provided for the car loan, you may be allowed to pay for a lower interest rate before it goes up to its originally agreed rate.
Applying for a car loan refinance is usually a quick easy process, taking around 24-48 hours with most lenders. Before you think this quick turn-around time might be a quick-fix solution to any cash flow issues, remember to take your time researching your options before you jump, because rates are drastically different amongst lenders in today’s very competitive lending market.
When considering car loan refinancing, it’s important to remember that not all loans are created equally. Many loan contracts are filled with convoluted terms and bank jargon, so it’s easy to miss any hidden fees or charges. You’ll need to look very carefully at the terms being offered, as you wouldn’t want to end up refinancing over to a loan that costs you more than your current one.