Top car loan types

Car loans are one of the convenient ways to buy a car. There are many types of car loans offered by lenders. They differ in terms of the interest rates involved and the manner of payments involved. These top car loan types are the following:

1. Straight Auto Loan
This is considered as the common car loan. In order to get this type of loan, you need to approach a car dealer and fill out an application form. To get a better loan deal you need to have a high credit score, down payment, and the source of funds to pay for the amount you owed.
The source of funds to pay for the borrowed amount refers to your employment and other business. It is advisable to bring along a proof of employment and valid IDs when applying for this type of loan.

2. Auto Equity Loans
This loan allows you to apply for loan to buy the car. The car then serves as the collateral for the amount you owe from a lender. Most of the time, lenders also accepts houses as collaterals. This gives the lender an assurance that you would pay the borrowed amount.
These loans are beneficial yet these pose greater risks. It is therefore important to determine your ability to pay for the auto equity loan for it may result to outcomes such as losing the car or house in case you fail to pay the borrowed amount.

3. Auto Refinance Loans
An auto refinance loan provides you the option to obtain a loan from a second lender. The second loan is used to pay for the first one. This allows you to reduce the monthly payments and the loan’s interest rate. This is open to an individual who is able to buy a new car but is having a hard time handling the vehicle’s monthly payment.

4. Bad Credit Loans
These loans are suit car buyers with bad credit scores. A lot of lenders are ready to help bad credit holders rebuild their scores by giving them loans. This kind of loan however goes with higher interests rates.

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