Auto Loan

An auto loan (car loan) is a special form of personal loan, in which a car serves as collateral until the loan amount is repaid in full. In case of non-payment of the loan by the borrower, the bank may demand the sale of the collateral. Loan terms can be different.

A car loan is a targeted loan that is provided by the lender exclusively for the purchase of a car and cannot be spent on anything else. Currently, taking out a loan to buy a car is no more difficult than buying a mobile phone. This type of lending is very popular due to its availability and ease of processing.

A car loan can be obtained not only at a bank but also at a car dealership. This makes it even more accessible to the population. But at the same time, the choice of banks in a car dealership is limited, which often implies inflated interest rates, so you need to look through all offers of banks in advance and choose the most suitable conditions.

Auto loans are becoming more and more affordable. A large number of consumers are ready to borrow money from various banks in order to purchase the desired car. A person no longer needs to save money for many years to fulfill his/her cherished dream.

The main feature of a car loan is that it involves collateral. The purchased car serves as collateral, so the client cannot sell it without the permission of the bank. The client can use the car while the loan is being paid. Since the car belongs to the lender, it is usually compulsory to insure it.

Businesses also successfully use auto loan services. For them, a car loan is one of the ways to effectively use material resources. The purchase of a car by an enterprise under the car loan service makes it possible to instantly operate it for its own purposes. Therefore, the car immediately begins to recoup its value.

The online auto loan service has become very popular. Unlike government auto loans, they can be taken remotely, without leaving home. A potential borrower can fill out a short application 24/7 and send it to the lender for consideration. Our online referral service – – saves a person from unnecessary trips to several lenders, many hours of waiting in queues and long waiting for decisions from financial institutions.

Auto loan types

A person cannot always buy a car for cash, and bank employees can easily solve this problem. In the struggle for clients, banks have developed many interesting and tempting car loan programs, which differ significantly in terms of the offered conditions. Currently, there are the following types of car loans: classic, express, trade-in, buy-back, car loans without a down payment, car loans without compulsory insurance, and car loans without interest.

What are the pros and cons of auto loans?

The main advantage of a car loan is the ability to buy the vehicle that you want, and not the one which you can afford at the moment. Saving money is a long process, and besides, inflation can significantly devalue savings.

Another important advantage of a car loan is the ability to buy a new car.

When buying a used car, a loan gives you the opportunity to become the owner of a decent car that has undergone pre-sale training and is not much different from a new one.

The main disadvantage of any type of loan is the need to pay large amounts to the bank for many months. The loan increases payments, respectively, when buying a car, you overpay a certain amount for it. Another disadvantage of a car loan from a bank is the complicated procedure for obtaining it. You will have to spend several weeks or even months on it.

Tips and advice on taking out auto loans

Buying a vehicle on credit is a rather serious step that requires a detailed analysis and consideration of all the nuances. No matter what type of car loan you choose, you must always follow such a mandatory rule as a careful study of all signed documents. Any type of auto loan does not tolerate legal illiteracy, so if something confuses you or is not clear, take a copy of the agreement with you and consult with a lawyer. Do not forget to compare this copy with the original later when you sign the contract. Pay special attention to the clause describing penalties that may be imposed by the lender in the event you delay payments.

Credit Union Black Book reminds you that car bought on credit can be used freely but it cannot be sold, returned, exchanged or donated without the permission of the lender – until you fully repay the debt.