Auto & Motor

Loan Options When Buying a Vehicle

Buying a vehicle is an exciting adventure. This is mostly because it is a time where a person gets to choose what they want and what they need as far as transportation of everyday events. There are so many options available in today’s market for vehicles. Some are more expensive than others. There are also many ways to pay for a vehicle but the most common way is to finance it through a loan company. What are the options a person has for a loan when buying a vehicle?

Private Loan

A private loan is a loan through another person. A friend, family member, or acquaintance may loan a person money in order to purchase a vehicle. The person would then pay them bank under whatever terms they agree to. Most of the time, private loans are completed without interest or at a much cheaper interest rate than other avenues for loans.

Bank Loan

Bank loans are the most common types of loans for vehicle purchases. The automobile dealer may have an agreement with the banks to do all of their financing through them. Also, a purchaser of a vehicle may have already secured pre-approval from their current bank.

Credit Union

Some people are currently members of credit unions that may offer to finance a vehicle loan. Credit unions are a good choice to use because of their low-interest rates and loyalty to members. They often do not finance loans for non-members.

Finance Company

Finance Companies are another option for securing a loan for a vehicle. There are some, such as Consumer Portfolio Services, that cater to people with poor credit scores, low income, or no credit at all. These types of companies have different loan terms and higher interest rates in most cases. They work indirectly with the purchasers.

A person can also pay cash for a vehicle. Depending on the cost of the automobile, this may not be an option although it would avoid a person having to pay interest. The credit score of a person is what will determine the interest rate. Most automobile sellers will release the average interest rates online on their websites. It is advised to know what type of financing you may qualify for prior to going car shopping.