Both public and the private lenders exist in USA offering different kinds of auto loans. The rate of interest varies from one institution to another depending on the financial background of a borrower.
Car Loans in USA: The Basics and the Benefits
Both public and the private lenders exist in USA offering different
kinds of auto loans. The rate of interest varies from one institution to
another depending on the financial background of a borrower.
You have planned to purchase a car - new or used depending on your
personal preference. However, you lack the necessary funds required to
invest in a car of your choice. You plan to take an auto loan. There are
basically two types of car loans in USA - traditional and public such as
banks and credit unions and private dealerships having a lending wing as
well as online financing companies.
The banks have a set of guidelines which every potential borrower needs to
follow and get qualified before applying for a car loan. People with a bad
credit are usually not entertained by a US bank since there is no surety
when they will be able to repay the final lending amount.
The private dealerships on the other hand do not have any restriction in
terms of people wanting to take an auto loan. In reality, the maximum
amount of car loans in USA is given by a private dealer/lender. The rate of
interest varies from one lender to another. Besides, the different lending
institutions give different amount of loan to people after analyzing a
potential borrower's financial situation.
Principle and Interest
The amount of money you take as a loan is termed as the principle. The rate
of interest is charged on the amount of money you have applied as a loan.
The monthly payment varies based on the percentile of interest charged on
your lending amount.
The Auto Loan Term
It refers to the number of days for which you have taken the loan. By the
end of the loan term, you have to return the final lending amount
(principle+interest) to the lending institution. In case, you fail to pay off the
money at the end of the tenure, you will be charged a penalty and
considered as a defaulter.
Your Credit Rating
The rate of interest is fixed depending on the financial condition of an
individual. For example, a person with a good credit score will be charged
a higher rate compared to a person with below the average credit rating.
The Application Procedure
Today, the lenders allow the potential auto buyers to apply for a car loan in
USA over the Internet. Thus, it eliminates the need to travel all the way to
the lender's office personally to collect and then again submit the
hard-copy loan application form. The time consuming, stressful journey to
and from the lender's office can be easily avoided via the Internet-based
The Loan Sanction Process
Any type of car loans in USA is approved quite easily following a smooth
step by the private lender. Often people with a bad credit send a
pre-approval loan application request which gets sanctioned after
necessary scrutiny. The car lending agency will then ask you to move
forward with the loan application procedure. Usually, the entire loan
approval process takes a maximum of a week's time.
The private dealerships don't ask for your income proof or credit report.
They will only ask you to submit your address proof, identity proof, and age
proof to close the financial transaction.