Opting for the Apt Auto Loan

Auto loans are one way to ensure your dream is of owning a car is possible. These loans are freely available, but you need to consider specific factors before making a choice. The financier pays off most of the car’s value, thus these loans work out simple and easy. The buyer pays only a small amount as down payment for the car. You find that a large amount of financers tie up with the manufacturer when offering the auto loans. Go through the types of auto loans before making a choice.
1. Secured auto Loans versus Un-secured auto Loans:
Secured loans require the borrower to put lien on an asset. Most often the secured auto loans prefer a lien on the car you intend buying. There is also a possibility of the lien being put on another car or even a house owned by you. A borrower needs to decide on which asset he/she is willing to put a lien on. The lender has the authority to repossess the assets put on lien in case of any default. These loans can be easy as the lenders face less of risk of losing out on the funds. This means, the borrower can get low rates of interest with these loans.
The un-secured auto loans do not require any lien. The lender opts or a legal action against the borrower in case of any default. The borrower pays a higher interest rate with the unsecured auto loan.
2. Pre-computed interest auto loans versus Simple interest auto Loans:
There is an option of deciding on an auto loan in accordance to the calculated interest. The simple interest auto loans have the interest being calculated on a preset periodic basis. The outstanding amount end of each period determines the rate of interest. In case it is possible to pay additional principal on the loan taken, the interest needs not be paid on the principal which has been paid off.
Pre-computed loans is where the buyer needs to pay in accordance to the set schedule with each payment is calculated at a fixed rate of interest and a part of the principal. Paying off the loan before time does not mean you do not repay the interest which is pre-computed.
3. Advance EMI for Auto Loans:
The advance EMI scheme as an auto loan works well for many as the total cost of the vehicle is catered to by the lender. The EMI’s are given by the checks which are post-dated with the initial EMI of almost 10 needs to be paid as an advance. This scheme can be a little bit costly as the rates of interest are on the higher side.
It is important to conduct a research only after deciding which auto loan can work best for your requirement. You can start off by comparing the different terms and conditions offered by the different lenders and the auto loan companies. This helps you in saving a lot of money as an auto loan is definitely a ‘big’ time investment.