A car loan is one of the borrowers most frequently contracted. In the financial market, you can find a lot of different offers dedicated to buying a new and used car. What are their types and what does it involve? See chelmsfordchess.org for an example
What is a car loan?
As the name suggests, a car loan is an intentional commitment to finance the purchase of a motor vehicle to mix. This is the simplest definition of this type of loan. Motor vehicles include both passenger and heavy vehicles, motorbikes, as well as agricultural vehicles and machines.
But it does not have to be only a special-purpose loan – we can also apply for a cash loan, which the borrower decides about its purpose. However, the conditions for granting a car loan and the borrower’s requirements are usually much more favorable than for other forms of lending.
Types of car loans
What options does the person applying for a car loan have to choose? What products are offered? Here are the most important of them. It is worth emphasizing that this way most often a new car can be credited. If you are applying for a used car loan, it may not be older than 8-10 years.
Traditional car loan – is based on interest and capital installments; a car is used as collateral for the loan; the commitment may be incurred for many years (even 10) and spread over installments; no own contribution required.
Balloon car loan – this solution is dedicated to people who change the car relatively often; they are usually offered by banks belonging to car concerns; the repayment is usually of a three-stage nature – the first stage is the payment of a specific own contribution, the second stage is the payment of monthly loan installments, e.g. for several years, the third stage is the payment of the final or balloon fee, which is usually 20% -30% of the vehicle value – this can also be broken down into installments; the borrower may also leave the car in the showroom and choose another one before paying the balloon fee; The balloon fee is included in the first charge for a new car.
Car loan 50/50 – with this type of commitment, the borrower pays half the value of the car, and the other half after a year, but it can be broken down into installments; this requires paying a commission or buying out insurance, which means that it will not be as cheap a loan as in the case of the original form of settling the liability.
Car loan collateral
Of course, banks may apply collateral for a car loan. Most often they are:
- vehicle registered pledge – the outstanding loan makes the bank the owner of the car;
- assignment from an AC policy – the car is insured; in the event of an accident or complete destruction during repayment of the loan, the insurer assumes the repayment of the remainder of the debt towards the bank;
- transfer of ownership as security – the bank is entered in the vehicle’s registration certificate; if the loan is not repaid, the bank takes over and cash it to cover the liability.
A quick car loan – where else can you get it?
If we quickly need cash for a car or we have not been granted a bank loan, we can apply for a non-bank loan. Before you decide to choose a specific lender, you should review the ranking of offers and opinions about entities.