If a person has decided that its time for him to get a new car or perhaps his first purchase then undoubtedly he needs to get the best type of loan
. Most of the people begin with the process by considering either used car loans or personal loans for their upcoming purchase. But whats the difference and how will one know the right type? One can find the answer below:
Before even selecting for a specific car one can apply for online car loans. One should assure that he knows the requirements of his loan before applying. This implies that if a person goes ahead and shop for car before applying than he needs to assure the parameters laid down by the lender. For e.g. Few car loan companies even require that the car should be new enough or should have run a limited number of miles. There could be even restrictions on what kind of vehicle it is.
Used Car Finance
Used car financing can go towards the purchase of the car. On the other hand, personal loans are very flexible and it can be used for a number of different purchases. The main reason to take a personal loan instead of a used car loan is if one needs to make a sizable purchase at the same time without taking any separate loan. If the purpose of taking a loan is to buy a car then he can take any loan.
Find A Cosigner
Before even a person initiate with used car loan quotes, he should run a credit check on himself. If a person is going for a first purchase than he may not have any credit, thus a cosigner will work against the problem. One can even ask a family member or a parent who is willing to sign a loan. One should assure that he never signs anything, even in a digital format. One should question the lender and should know about the terms and conditions before signing the deal.
The major difference between one loan and the other is the interest rate. The lower the rate, the faster one can pay off and the lesser the interest overall. One often has the choice between the fixed rates and variable on used car loans. A variable rate may cost one less money if he wants to pay of his loan in the shortest amount of time as possible. A fixed rate term will keep the payments predictable over the complete term length.
Secured And Unsecured Loans
The other major difference is the secured and the unsecured loans. When a person has collateral like the car itself then he is participating in a secured loan. This loan often comes with low interest rates as there is no security. When a person takes a personal loan, most of them are unsecured thus one has to pay a higher interest rate for not providing the collateral. One should always be aware about the hidden fees and few unpleasant surprises about their used car loans.