One of the most popular loans in the market today is car loans. It is difficult to purchase a car by paying the whole amount upfront. Car loans help you buy the car of your choice. It also reduces your financial burden to a large extent. There are many financial institutions that provide loans to buy cars. Loans are available for a new car and also to buy used cars. However, you need to look into the various options available before you go in for a loan. The idea of car loans was first brought about by William "Billy" Durant, who founded General Motors. The first financing source for automobile loans is General Motors Acceptance Corporation (GMAC).
How It Works
The easiest way to finance a new car is through the dealership where the car is purchased. You can research individual dealerships for the best deal and secure a loan at a low rate and save money. The term of car loans usually vary from 30 to 72 months. Long term loans usually offer lower interest rates. You will also have to pay a down payment and this usually depends on the value of the car you want to buy.
The major benefit of getting a car loan is that you can buy the car of your choice. Another benefit is that a car loan usually covers the car's insurance. So when you are paying off your loan, you are also paying your insurance. Once you have finished your loan and get the ownership, you are free to do what you want with the car. You can trade it for a new car or even sell it to someone with a good profit.
Car loans increase the total cost of the car. Before you go in for a loan, consider how much money you can pay as a down payment. You also need to check out the loan term, annual percentage rate and monthly payments. The monthly payment depends on the loan amount, interest rate, term of loan and the amount of down payment. In general, look for loans with no prepayment penalties.
The ideal time to go for a car loan would be when you purchase a new car.
There are many companies that provide financial assistance to purchase cars. Some of them are HSBC, Capital One Bank, Bank of America and Citibank.