Car loans for new and used vehicles
If you're ever purchasing a new or quality used automobile, then vehicle financing is something you'll inevitably have to deal with. Next to houses, cars are the single most valuable possession most people own, and rarely does the average person have the cash to purchase a car outright, on the spot, without some kind of financing plan. This is where auto loans come into play.
Car loans can be obtained through your bank, or through the dealership where you're purchasing your automobile. In addition to these two options, you can also source auto loans through independent financial institutions and lenders. Getting an online car loan can save you money, too, as you might be able to beat the interest rates offered by your bank or car dealership.
How Car Loans Work
Car loans work much like mortgage financing, except over a much shorter period of time. You put down a percentage of the total value of the transaction as a down payment, and a financing company or bank pays the balance. Then, you repay the lending institution that amount of money, plus interest, over a fixed period of time. The key to auto financing is the annual percentage rate or APR; this figure tells you how much
Getting a bad credit car loan can be a trickier proposition, as banks may disqualify you based on your credit rating, repayment history or income level. Some car dealerships advertise that they will "finance anyone" or that bad credit or no credit is "no problem." Be aware that while you may be able to get financing for your car purchase through one of these dealerships, you will likely be faced with high interest rates, which will increase the amounts of your monthly payments.
Auto Loan Refinancing
Auto refinancing becomes an option if interest rates go down, or if you find a better deal than the one you currently have. When you get auto loan refinancing, the new lender settles your current loan, then puts you on a monthly payment plan with them. You continue to make monthly payments, but generally for lower amounts at lower interest rates, saving you hundreds or even thousands of dollars. If you purchased a car when interest rates were higher, or if you feel you're paying too much each month, you can investigate your auto refinancing options.