Car LOANS
People want their own vehicle for a variety of reasons, including travel convenience, societal status, family road trips, and freedom from public transportation. However, few individuals have the financial means to pay the full price upfront.
A car loan is a personal loan for the purchase of a new or used car. You have to repay the loan and interest over a set period, typically one to seven years.
Types of car loans
Depending on the type of car you want to purchase and your present financial situation, here are some loan options for your first car:
- Secured car loans: This is the most common form of car loan, in which the vehicle being purchased serves as collateral.
- Unsecured car loans: Unsecured car loans do not require you to use your vehicle as collateral. As a result, unsecured loans are a risky affair for a lender. Lenders can charge exorbitant interest rates and fees to compensate for the risk element involved. Also, if you do not have a good (or any) credit history, you may have trouble getting an unsecured loan.
- Chattel mortgage: Chattel mortgage is for buyers seeking to buy a vehicle for a business. In this case, the company obtains a secured loan, and ownership of the vehicle is retained by the lender for the duration of the loan period.
- Novated leasing: This is a contract between an employee, their employer, and a vehicle dealer. The employee foregoes some of their salary to help pay for the new vehicle. The employee accepts ownership of the vehicle in exchange for agreeing to lower their take-home pay as they pay off the car.
Documents requirements for a car loan
To ensure a hassle-free car loan application, you need to provide a variety of documents proving your reliability as a borrower.
- Proof of income
- Proof of assets and liabilities
- Information about your car and insurance
Process of applying for a car loan
Here are the steps for applying for a car loan:
- Research different car loan options from banks, credit unions, and other lenders.
- Determine how much money you need to borrow for the car and how much you can afford to repay each month.
- Check your credit score to see if you are eligible for a car loan and what interest rates you may qualify for.
- Choose a lender and apply for a car loan.
- Provide personal and financial information, such as your income, employment history, and proof of identity.
- Submit the loan application and wait for the lender to review it.
- If approved, review and sign the loan agreement, which outlines the terms and conditions of the loan.
- Make the required down payment or deposit for the car and provide proof of purchase.
- Wait for the lender to transfer the funds to the car dealership or seller.
- Begin making payments on the car loan according to the schedule outlined in the loan agreement.
Looking for the right car loan can be overwhelming, with so many lenders and options to choose from. That’s where SB Experts come in!
We at SB Experts are a team of finance professionals who specialize in finding the perfect car loan for your needs.
Contact us today and let us help you find your dream car!