Auto Loans

An auto loan is a type of debt secured for the purpose of purchasing an automobile. Like all other types of loans, it involves a lender, a borrower, an interest rate, and a set amount of time, called a term. Here is a quick overview of what an auto loan is, what it does, and what it means to you.

Buying an automobile is a major expense; in fact, it lies right beneath buying a home and funding your children's education in the hierarchy of average consumer purchases. An automobile costs a lot more than just it's sticker price; you have to consider gas, maintenance, auto insurance, and other such items in the total value and expense of the vehicle.

Before you shop for a car, make a budget and try not to spend more than 10 percent of your totalor gross income. When it's time for you to make an automobile purchase, you'remore likely than not to be taking a loan. There are many different sources of auto loans for you car expenses; which one is correct for you depends on your credit score and the price of the car.

Another major factor is that you have to be eighteen before you can take out an auto loan. Your income should equal at least a couple grand, and you should be willing to pay according to any agreements made between yourself and the lender. Read the fine print and anything you don't understand, take to an attorney or other expert.

The main sources for auto loans are local credit unions, local banks, dealer car financing, dealer in house car financing, car financing through a credit card, and car financing through a home equity loan. You don't need to buy a car before you get an auto loan; you just apply for the loandirectly and they'll let you know if you're accepted.

The amount of the loan that is offered depends on whether you've got a new or older car and the loan-to-value ratio on the car. Needless to say, if you have a nicer car, you'll most likely get a better deal. If you decide to buy the car outright, you won't have any monthly payments, but this can take a huge chuck out of your pocket that you might need. If you lease thecar, you are building up credit, making steady monthly payments. This also depends on your finances and whether or not you're able to afford it.

There are numerous sources for finding auto loans, and one of the best places is in the online arena. There's a wealth of providers who can offer up quotes for you to compare, and make sure you do. The better you compare and the more you know about auto loans, the better off you'll be when you're applying.

Here are some common sources of auto loan:

  • Local credit unions;
  • Local banks;
  • Dealer car financing;
  • Dealer in house car financing;
  • Car financing through a credit card;
  • Car financing through home equity loan;
  • Online lenders.