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Finding the car of your dreams is only half the battle when it comes to purchasing a new vehicle. The other half is finding a way to pay for it, and that’s where auto loans can help.
Types of Auto Loans
When it comes to vehicle financing, you have several options from which to choose. Easy Auto Part: Auto Insurance & Accessories can give you all of the information you need to make the right decision. Here is a brief explanation of the various types of auto loans.
Dealership financing is where the dealer and a bank collaborate to bring you a vehicle loan. This is the most common type of auto loan, and it is arguably also the most convenient. However, there is one huge problem with this type of loan: two parties have to make a profit off of your financing deal. The bank, of course, need to charge you interest for the convenience of borrowing, but then the dealer also wants to pocket some extra cash for making the deal. As a result, the dealer significantly inflates your interest rate to pad his own pockets. It should come as no surprise, then, that dealers usually make more money off of the financing deal than they do off the sale of the vehicle.
Home Equity Loans
Another option for vehicle financing is to use the equity you have in your home to take out a vehicle loan. Home equity refers to the appraised value of your home less any outstanding debts against it. Home equity auto loans can typically offer very low rates because your home provides the security of collateral. On the flip side, though, these loans are very risky because, if you fall behind on payments, you stand to lose your house. Easy Auto Part: Auto Insurance & Accessories typically does not recommend these kinds of loans unless you are 100% confident you will be able to make every payment on time. A new car just isn’t worth the risk of losing your home.
Independent financing is the type of auto loan Easy Auto Part: Auto Insurance & Accessories recommends the most to its visitors. These loans come from independent banks and credit unions, usually online lenders, that can offer the convenience of dealership financing combined with the ultra-low rates of home equity auto loans. The nice thing about independent auto loans is that you can get multiple quotes on loans from various lenders for free by shopping online. In this way, lenders are forced to compete for your business, which gives you a better chance of getting the lowest rate. You can also apply for your loan from the comfort of your home computer without having to visit banks or dealerships.