Types of Car Loans: Best Way to Finance Buying a Car

Tuesday, February 18, 2020, 6:00 AM | Leave Comment

Buying a car is an achievement in life. Not to all people, but some purchase cars because it is a necessity. When you live in a busy city, you will require a vehicle to aid your movement from one place to another.

But it is not that easy to purchase a car. It would help if you had lots of cash to buy one and have a good source of income to maintain the vehicle.

Currently, many people would love to own a car aren’t due to financial challenges.

That said and done, you can now purchase a car by merely applying for different car loans.

Without getting into specifics in this guide, you will learn about the different types of car loans and the best way to finance buying a car.

Make sure that 2020 is the year when you buy your car.

Let’s begin.

Types of Car Loans

If purchasing a car is a necessity and you don’t have enough money, you can borrow a loan to facilitate you purchasing a vehicle. It is the best way to finance buying a car.

There are different car loans. So, the following are the best car finance loans you can apply for.

• Peer-to-Peer Loan

  Also known as P2P lending is one of the best ways to get a loan to finance your ambitions of buying a car. With this type of loan, you don’t need to get credits through a bank but directly from another person.

  Some of the best peer-to-peer lending platforms include;

  • Kiva

  • Daric

  • Peerform

  • Zopa

  • Upstart

  There are many others, but these are the best P2P lending sites. So, if you don’t want to engage with banks or societies, this is one way to securing a loan to purchase a car.

• Direct Financing

  With this type of lending, you only get the loan directly from the lender. No intermediaries between you and the financial institution. Direct financing eliminates you from paying the loan with high interest. Direct funding is the best way to get funds that will help you buy a car. The only fee you will incur when applying for this type of loan is a commission for the one who organizes for the loan transaction between you and the lender, for instance, a securities broker.

• Indirect Financing

  Here there must be an intermediary between you and the financial institution or lenders. The intermediary will make sure they get the loan you require from a ready lending party and give it to you. But you will pay the loan at high interest.

  For you to get an indirect financing loan, you can contact depository institutions like commercial banks, credit unions, mutual saving funds, and savings and loan associations. Other intermediaries are insurance firms. Through them, you can get a car loan and get to purchase your dream car.

• Secured Loan

  Another type of car loan is the secured auto loan. With this type of loan, any of your asset as security. Once you fail to repay the loan, the lender will have the right to auction your asset and get there remaining payment.

  You will have to accept a lien for you to get the loan. When you sign the lien, the creditor will have full possession of your asset until the day you will repay the loan. Therefore, if you want to buy a car without stress, then you can apply for a secured loan.

• Unsecured Loan

  Unlike a secured loan here, you don’t need to have collateral for you to get the loan. But the only thing you need to have is a good credit score. In your current state, as you look forward to purchasing a car. It would help if you had a good credit score to get enough money to buy the vehicle.

  To get the unsecured loan, you need to pay all your bills on time, have a stable source of income, and pay all your debts. Once you have all these qualifications, you can now find the right financial institution to lend you cash to buy a car.

• In-House Financing

  Do you need a car loan? But you have a bad credit score? Don’t fear you can still get a car loan from a car dealership. When you go to a car seller, you only need to inform him about your need to purchase a car on a loan. The dealer will give you loan application forms, which you will fill and after that give you the vehicle you want on bad credit.

• Private Party Auto Loan

  For you to get the private party auto loan, you need to have already selected a car before you apply for the loan. Once that is done, the person giving you credit will directly pay the owner of the vehicle (who must be a private person, not a dealership). After that, you will start paying your loan with interest.

Conclusion

To purchase a car is not an easy thing, but you can simplify the process if you apply for car loans. There are very many car loans you can apply for. The only thing is eligibility. If you have all the requirements, then you can receive the credit.

Thank you for reading this article and success as you plan on applying for your car loan.

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