A car (auto) loan is a targeted loan that can only be spent on the purchase of a car. In this case, the purchased car serves as collateral. When applying for a car loan, it is almost always necessary to make a down payment – it can be more than 20-30% of the cost of the car.
In addition, it is often necessary to insure the car. Offers without these conditions have higher interest rates.
You can apply for an auto loan to buy a car both in a car dealership and from a local lender.
Auto loan requirements
- Proof of identity;
- Credit and banking history;
- Proof of residence;
- Proof of income;
- Proof of insurance;
- Vehicle information;
- Current vehicle registration (for trade-in);
- Down payment.
Advantages and disadvantages of an auto loan
A car loan has the following advantages:
- Fast application and funding;
- The amount of a car loan always depends on the cost of the car;
- The interest on such a loan is usually lower than on a personal loan on the same terms;
- When applying for a car loan, you can use the state support program, which will further reduce the rate.
At the same time, a car loan has quite serious disadvantages:
- When applying for an auto loan, you will need to make a down payment;
- You will need to purchase car insurance. If you refuse to buy it, the bank can increase the interest ;
- The car will serve as collateral – your actions with it will be limited;
- You can use state support only if you meet certain conditions.
Things to consider
First of all, check if the car you want to buy meets the bank’s requirements. If not, then you can try to buy it with a Texas personal loan online. If it does, then it will be more convenient to use car loans. Study the terms of the loan program and compare it with your characteristics. It is also recommended to calculate the car loan payments in advance. To do this, you can use a specialized online calculator. It is enough to enter the required loan conditions – amount, term, down payment, and others – after which the service will automatically determine the approximate amount of payments for it.