Transportations and cars has become one of the main factors in our everyday life that allow us to be independent from wether, from other people and waiting for the bus at regular time intervals. When you have a personal car you car drive anywhere you want anytime you want and that give us freedom like we have never seen before. But cars usually are very expensive and driving is also not the cheapest activity that you can do because you are burning fuel and in our modern world diesel or petrol is not cheap! That is why many people choose to buy their vehicles with a loan that is obviously called – car loans.
There are various loan types that are directly or indirectly related to cars but the two most popular ones are car loans and a loan against a car and they are two completely different services that you must distinguish before applying for any of them.
A loan against your car
This is a secured loan type where you guarantee your car as a collateral when you borrow money but you can still keep driving and using your car even if it acts as a collateral. With this secured loan type you can get a loan for up to 90% of your car’s value with little or no paperwork. And that means you can finance much bigger expenditures than you could with a simple online loan or a consumer credit option. When you want to get a loan against your car then you will need to insure it and that is not cheap but lenders are requesting this option so they get their money back no matter what happens. And even if you wreck your vehicle that car insurance will pay for the repairs of for a new vehicle. When you are using something as a collateral you must be careful because if you don’t pay you monthly loan payments the lender is entitled to take that thing from you with no questions asked policy.
What is a car loan?
A car loan in its simplest form is a loan that you take out from a bank or a non-bank lender that will be directed in buying a new or used car. These loans may range from a 100 Lari to 100000 Lari or even more and have a repayment terms from a couple of months to a decade. Usually car loans are secured by the same vehicle as a collateral so they are much more safer for lenders and because of that you can get a car loan approved even if you have a bad credit history! But a car loan can also be a simple online loan or a consumer credit that you use for buying a car without the need to put your vehicle up as a collateral.
Why use car loans?
Buying a used or brand new car can be quite expensive and for the everyday man or woman that kind of money is simply too big to save from your monthly salary. Automobiles are an essential part of out everyday life because modern cities have become huge and if you are not living downtown you will need some kind of a transport to get to everywhere you want. Cars allow us the freedom to drive any time we please and at any time intervals and when you run out of petrol you can simply stop at the gas station, refill and continue your journey. Imagine how much different our everyday life would be if we did not have automobiles and we would need to go everywhere by foot or even worse use some other mode of transportation like horses or bicycles. That is why these car loans are an essential part of todays modern economy and we simply can’t live without them!
What are the conditions for this type of credit?
To apply for a car loan you will need to meet some conditions or else you can be simply rejected and will have to think of some other methods how to get money for your car. Usually You have to be at least 18 years old and you can’t be in a financial relationship with the same lender that you have chosen for your car loan. You will need to also pay an up front cost of about 1-1.5% from your cars value for the paperwork and to finalize the contract. And you will also need to insure that new vehicle so that your creditor can feel safe that you will always pay back the money no matter what happens to your car. But apart from these simple conditions there aren’t much more you need to do. You can have a negative credit history as well as no credit history at all because the car will act as a guarantee that you’r lender will always get back his money. And that is why in some cases it is easier to get a car loan than to get a short term online loan that has no collateral and no guarantor.
How to get your car loan?
To apply for an auto loan you will have to choose the right lender that will provide the best borrowing agreement with the lowest interest as well as the lowest up-front payments. Then you will have to fill out a loan application and wait for it to be approved. This can take a couple of hours but it will still be much faster than getting a loan from a bank. When you get approved you will have to fill out a form together with the car salesman and then your lender will transfer those funds to his account but you will need to register your new car and take out that insurance on it. After the deal is finalized you will have a new car and will have to pay those small monthly payments but if you get additional cash you can simply pay back that loan in one lump sum or a couple of payments.
P.S You can find the right lender by checking the auto loan comparison table at this website where we give you detailed information about all the characteristics that you need to measure before getting your loan.