- It is a long-term loan that is secured by a car.
- It is offered only by non-bank lenders.
- It has a repayment period of 72 months or 6 years.
A car loan is very often confused with a car loan, i.e. a loan that is intended to purchase a new car, in which case, the new car is not commercially pledged and owned by the lender. A car title loan is also called an auto payday loan, auto leasing, and consumer car title loan, but they are all traditional bank or non-bank types of loans, and the funds are used to purchase a specific product or to pay it off. A car title loan is provided by both bank and non-bank lenders. A loan that is secured by a car can be used for any purpose to which the amount of the loan corresponds. The collateral, or in this case, the car pledge always serves as a guarantee in such cases, if the debtor has failed to repay the loan, then, the lender has the right to take the car from the debtor and make it his property, thus compensating for the amount of the loan that has not been repaid.
What are the advantages of a car loan?
- This loan is beneficial to both lenders and debtors. The lender can feel financially secure, because when the borrower cannot repay the loan, he has the right to take the car away from him, thus compensating his invested financial means and so eliminating the risk of financial loss. At the same time, the borrower would receive a loan of up to 90% of the market value of the car, and would be able to continue driving it. In addition, thanks to the collateral, the lender can afford to apply and the borrower pay a low interest rate, which is very low compared to other types of loans without collateral.
- As mentioned above, the borrower has the opportunity to borrow 90% of the market value of the car, and then it turns out, the higher the market value of the car, the higher the amount of loan that can be borrowed, but for a car loan there is a fixed amount of 3,500 to 20,000 EUR, which depends on the conditions of the lender.
- Since the loan amount can be up to 90% of the market value of the car, it can be the highest amount that can be obtained by making an application via the Internet or SMS.
- The loan application is reviewed within 30 to 120 minutes and the loan is granted within one day.
- The application can be made in person at the bank or online.
- The potential client may have a bad credit history, because the collateral of the car is the main guarantor for the repayment of the loan.
Should you take out an auto loan?
Another thing to understand about auto loans is that there are two main categories under the term, and they are:
A car loan (auto payday loan) is a type of service where the customer gets money from the lender in order to buy a car and then slowly pay back the loan, and at the same time, already use the car. When it comes to car loans, then people often mean this type of loan by this term. Basically, people choose a car loan because a car is an expensive commodity to buy and it is often not possible to save up the necessary amount of money to buy a car without a loan.
Car loan (money secured by a car) – a loan secured by a car is a completely different service and it basically means that you have the opportunity to get a loan secured by a car. You can only use this service if you have a car for which you have already paid off the loan and you still have the amount of money you need. If you put up your car as collateral, you can get a loan of up to 90% of the value of your car, and you can keep driving it at the same time. As long as you are patiently paying your monthly loan payments, there is no problem, but if you stop paying, then there is a possibility that the lenders may take your car away from you!