Car Loan Basics
It is not just banks who issue car loans. Credit unions, building societies and even the car yards themselves offer vehicle financing options to motorists. In order to get car loans the vehicle you eventually purchase ends up being held as security against the loan, which often means consumers can borrow more towards the cost of a new car than they could if they opted for an unsecured personal loan. Another advantage of specialist car loans over unsecured personal loans is that the interest rates are, on the whole, significantly lower.
What Kind of Car Can I Buy?
Some car loans are available only to those purchasing a brand new vehicle, while others may let you consider purchasing a second-hand car, but only if it is of a certain age, often less than three to five years old.
There are an increasing number of lenders who are offering especially attractive loan terms and interest rates to those drivers who choose to buy environmentally friendly cars. The cars that meet the requirements for consumers hoping to get car loans like these are, on the whole, vehicles that meet a certain official Greenhouse rating – usually at least a 7 – but with an increasing number of such vehicles available, these green car loans may be well worth considering.
Which is Best – Bank, Credit Union or Dealer Financing?
Not all car loans are created equal, so it is well worth researching car loan options before you go car shopping.
Most banks and credit unions will give you provisional approval on a certain dollar amount you can use to purchase a new car. Final approval will depend upon the actual vehicle you elect to buy, but at least you can shop in the right price range from the get-go, avoiding the disappointment of falling in love with a car you cannot afford.
The financing offered by the car yards themselves can seem like the most convenient way to get behind the wheel quickly, but before you accept it ensure that you cannot get a better deal by yourself elsewhere, as that is often the case.
