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Auto Finance and Personal Loans

13-Dec-2012

Auto Finance, Personal Loans: Whether you’re buying your first car or replacing your existing vehicle, auto finance personal loans are often the best fit for your lending needs. As with any personal loans, auto loans have certain nuances you’ll want to review before visiting with your lender. Even though every lender does things slightly different from the rest, having a solid understanding of a loan’s terms and conditions can assist you during negotiations.
Auto Loan Basics: Auto finance personal loans are special secured loans that are only used to finance the purchase of automobiles. As these personal loans come in higher amounts than the standard personal loan, your lender asks for the vehicle as collateral. This means that if you later fail to repay your debt, the lending company can take possession of your vehicle, or repossess it. Once they have the vehicle, they will attempt to sell it at auction to recoup their potential loss.
Auto Loan Stipulations: Whenever you’re in the market for a new car, keep in mind that the car payment and upkeep are not your only expenses. Auto finance personal loans carry the special stipulation that you maintain a specific insurance coverage level on the vehicle. Depending on the lender’s insurance thresholds and the type of vehicle, insuring the lender’s investment in you can carry a hefty price tag. This makes it important to find out how much your insurance premium will increase and factor in the expense when deciding if you can afford the loan’s monthly payment.
Auto Loan Repayment: For auto finance personal loans, your lender often uses the age of the vehicle and the value to determine your repayment period. Older cars with relatively small sticker prices may provide you less time to pay off your car loan. On the other hand, a new luxury car or SUV might come with extended payments, or a balloon note. Regardless of which type of vehicle you buy, make sure the monthly payment is comfortable in your budget. It doesn’t matter if your auto loan term is three years or six years when you can’t afford next month’s payment.
Auto Loan Benefits: Beyond helping you to purchase the car you want, auto finance personal loans come with a distinct benefit. As long as your car loan’s term exceeds six months, your lender may report your payment history to one of the major credit bureaus. As long as you make all your payments on time, your auto loan may well help you to get a lower interest rate on your next loan.

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