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When buying a car, you will need some form of financing to cover the purchase. This could be in the form of a hire purchase or a personal loan. These days, personal loans have become a popular option among interested car buyers. In fact, the majority of people that go to dealerships already have financing arranged ahead of time through their banks or lender of choice.
What You Need To Know About Car Loans
How personal car loans work
After you have looked around and decided on a car you like, you’ll find out exactly how much you need to purchase it. You’ll have to pay the deposit and then take out a loan to cover the rest of the purchase.
Car loans allow you to borrow a fixed sum which is then repaid through a fixed monthly payment. It usually takes a year to seven years for a car loan to be paid off. The loan rates are usually hinged on how much you’re borrowing, how long you intend to pay the loan off, as well as your credit score.
Advantages of personal car loans
Car loans to be easier and simpler to set up. Its flexibility is also another thing that attracts borrowers since its term can last up to 7 years. The moment that the cash you’re borrowing has been transferred over to the dealer, you already own the car. You don’t need to wait until the end of the loan term to finally have ownership over the vehicle. These types of loans are cheaper than the financing that most dealers offer too.
Downsides of personal car loans
Of course, this financing option does come with some drawbacks too. For instance, getting approved will be hard unless you have a good credit score. Expect that your monthly payments will be higher compared to what you normally would have to pay if you get other forms of car financing. Owning the car outright may be a good thing but this would also mean that you’ll have to shoulder all the repairs. In addition, there is also the depreciation of the vehicle.
If you want to buy a car, it is next to impossible for you to produce the money needed to buy the vehicle right then and there. To be able to afford the purchase, you will need to take out a car loan to help you with the financing. While car dealers offer specific financing programs for potential car owners, you always have the choice to go for independent financing. All you need to do is sign up for a personal loan.
Things to consider about personal car loans
When getting a personal loan to purchase a car, all you need to do is figure out how much you need to make the purchase. You will then apply for a loan to a lender and once approved, you pay the amount to the dealer, you take home the car, and you then start paying off the loan to the lender who you got it from.
One of the best things about getting a car loan through a personal loan is that the funds do not have to be solely used for buying a car. Since it is a personal loan, the borrower has considerable freedom on how he will use it.
How to qualify
Just like any personal loan, you’ll need to meet the basic legibility requirements that lenders have set in order to be granted approval. From having the necessary income to having the necessary credit score, it is best that you find out what lenders require first before ending an application. The loan can be secured or unsecured. Generally, unsecured personal car loans can be a bit expensive interest-wise. If you will choose to secure it, you may be able to borrow more and you may get significantly competitive interest rates.
You’re advised to shop around too and to compare rates. Do see to it that you will ask for soft quotes when shopping so this isn’t going to end up causing a dent on your credit score.
Frequently Asked Questions
Must I Have A Guarantor?
Usually, lenders would require a guarantor for borrowers with poor or no credit history. A guarantor will serve as an added security if in case the borrower defaults on the loan. Since unsecured loans don’t have collateral, it is an added risk for lenders. However, if your credit is in good shape, lenders will often approve you without having a guarantor.
Is there complicated requirements I must provide?
No. The application process is simple and straightforward. All you need to provide is your personal information, proof of income, and employment verification. You also need to provide your checking account information where the money will be sent to. Other than that, you don’t have to provide any complicated documents or requirements to get approved.
How Fast Can I Have The Funds?
The entire process can be completed in as fast as 15 minutes. Getting the results of your application will only take a few minutes. So you don’t have to wait hours or even days to get approved. You can have the funds immediately and we’ll send you a notification once everything is good to go.
What If I Miss My Payment?
We understand that such things could happen. While some lenders may be lenient for one or two months, however, missing your payment could result in serious consequences. It could affect your credit badly and the lender may incur additional charges or fees as penalties for late payments.
You will receive the payment through direct transfers immediately to your checking account. Once approved, the money will reflect on your account within seconds. You will receive a notification once your application results are in.
Got questions? Let us know.