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Car Loans in USA: The Basics and the Benefits

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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.

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Car Loans in USA: The Basics and the Benefits

  1. 1. 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.
  2. 2. 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.
  3. 3. 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.
  4. 4. 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.
  5. 5. 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 application procedure.
  6. 6. 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. Documents Required 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.

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