What Are the Different Types of Auto Loans That Exist Today?

by whatsmind

It’s no secret that today’s automotive market is white-hot. Dealerships are having a hard time keeping both new and used cars on their lots because they’re selling so fast.

If you want in on the thrill of nabbing a new car in today’s market, then one thing you need to consider is how you’re going to pay for it.

There are many types of auto loans available to buyers, but what are the best auto loans? Read on to learn all about your options to make your car ownership dreams come true!

Secured Loans

The most common type of auto loan you’ll find is a secured loan. They’re super popular amongst lenders because they carry less risk. Factors that impact the specific details of your loan include your income, credit score, and the length of the loan.

Secured loans are a type of loan where the bank guarantees the loan with the car you’re buying. If for some reason you fail to make payments, then the lender can repossess the car and sell it to try to recoup their losses. One of the biggest problems here is that you may owe more than what they sell it for, so you’re still on the hook for the balance.

If you make all of your payments, however, then the bank releases the lien on the car and you own it outright. 

Unsecured Loans

Unsecured loans are loans that aren’t secured by any kind of asset. For that reason, they’re far less popular than secured auto loans. 

As a trade-off, however, you’ll likely pay more in interest than you would if you had a secured loan. If your credit is good enough to get a low-interest rate, then this is definitely a more desirable loan.

Considerations When Financing Luxury Vehicles

Financing a standard car is expensive enough, but financing luxury vehicles is another thing entirely. Not only do they come at a higher price point, but they are also more difficult to finance. You’ll likely need to put down a healthy downpayment and have a strong credit score to qualify.

Since luxury vehicles are such a big investment, consider renting one for a few days to get a feel for how they work. CarSHAiR is the best option for those, who want to experience the luxuries of driving.

Which of These Types of Auto Loans Will do You Choose?

If vehicle ownership is your goal, then you need to have a basic understanding of the types of auto loans available for your purchase.

Remember that the key to any informed auto purchase is the work you do before you ever make it to the dealership. The more research you do in advance, the better off you’ll be once you sign on the dotted line!

Do you want to stay on top of the latest personal finance and automotive news? We can help you out with that. Check out the rest of our blog for everything you’re looking for.

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