Today owning a car is not a big deal; every person can own a car either through getting it finance from any bank, financial institution or by utilising his saving. Usually, the person hesitates while using his saving because it is a sort of security for his future, as the result of which he is left with an option of getting his car finance through availing loan. One of such loan is car loans which provide the financial assistance to the person in purchasing a car.
Car loans have been designed in such manner that it suits the condition and need of each and every person that is, of both tenant and homeowner. For tenant, it is available in the form of unsecured car loans and for homeowner; it is available in the form of secured car loans. In secured car loans, usually, the security is the car itself but the person can also put his asset or anything of value as collateral. In case, the person fails to repay any instalment then the lender can repossess his car in order to realise his due payment. Such event also puts a bad affect on the credit report of the person. This implies that, surely secured car loan offers certain advantages but they also carry risk with them.
Car loan can be applied in either, physical market or online market. But online method carries advantage of applying it from anywhere and at any time. They involve no overhead cost, that’s the reason why they are considered as cheap mode of applying car loan.
However, both kinds of people either with good credit score or bad credit score can avail car loan but good credit scorer is always preferred by the lender. And this preference is showed by him by offering good credit scorers with comparatively low rate of interest. But the person with bad credit can also avail car loan on competitive rate of interest by taking advantage of the good credit of another person. Here, another person is called as co-signer. On the event of non payment of any instalment, co-signer is taken as liable person to pay the due amount.
Due to the presence of number of lenders the interest rates are very competitive in the market. In order to make interest rates more competitive the person should try to make high down payment as this reduces the subsequent financing amount and lower the risk of the lender which in turn makes him feel secure. And when the lender feels that there is less risk in the car loan deal, subsequently he offers lower rate of interest.