QandAs: Loans

What is a Car Loan?

Answer:
Car loans are essentially personal loans

used to purchase a new or used automobile. The auto lender advances the funds to the seller or dealership, and the borrower makes monthly payments to the lender. Auto loan terms range from two to six years, and an applicant's credit score influences the loan rate.

Auto lenders review a potential borrower's credit, and based on their credit history, they will either approve or deny the loan request. Because the vehicle serves as collateral, acquiring an auto loan is relatively easy. Even so, loan requirements vary from lender to lender, and many banks only deal with good credit borrowers. Fortunately, several financing options are available to auto buyers, which include loans for people with bad credit.

Prior to looking for a new car, buyers can contact a bank or auto loan broker and obtain a loan pre-approval or quote. Car dealerships offer finance packages. Yet, buyers may be able to secure a better rate with their bank or credit union. Borrowers with a low credit score should contact a lender that offers bad credit auto loans. You'll pay a higher interest rate on a bad credit vehicle loan, and the lender might require a cosigner . Still, a vehicle loan is a great way to improve a low credit score or re-establish credit.


	more Q&A sessions like this
	What are the Top Car Loan Companies? What is a bad credit car loan? How much will my Auto Loan Payment be? Are there application fees for Auto Loans? How do I allow someone to assume my car loan? If I cosign on a Car Loan am I responsible? What are the different lengths of Car Loans? Can I get a personal loan to pay for my car? Will my Credit affect my Car Loan? What is Credit? Will a Car Dealer help me get a Car Loan? What is AAA? What is an Auto Lease?