The most common financing option among consumers is a dealer-financed auto loan. These types of loans are quick and convenient because the whole process can be completed at the car dealership. Since the loan is secured against the vehicle being purchased, auto loans tend to have lower interest rates than personal loans.
When you get an auto loan, you are expected to may payments in fixed installments throughout a specified period of time until the loan is paid off.Until you fully pay off the loan, the lender retains ownership over the vehicle. This means that the lender has the right to seize your car if you are defaulting on your payments.
Tip: Consider shopping around online to get a general idea of what loan terms and interest rates are available to you.
Since borrowers will be putting their vehicle up as collateral for these types of secured loans, lenders take on a lower risk and can offer better interest rates for borrowers.
In addition to low interest rates, these auto loans are also fixed so there will be no increases in rates over time.
In general, car loans with come with terms that are fixed at 36, 48, 60, or 72 months. The longer the term, the lower the lower the monthly payments will be for borrowers and vice versa.
One of the major benefits of dealer-financed car loans is that the credit requirements are lower than most personal loans.
In many cases, poor credit history will not cause you to be denied a car loan. However, credit scores will impact the interest rate of the loan and lower scores will often come with higher interest rates on loan.
Continue on to read comparisons between personal loans vs auto loans to see which option might be best for you.