An auto loan is one of the types of targeted lending. This means that it can only be spent on one thing – buying a car. Auto loan rates are lower than personal loans. This is due to the fact that the car does not fully belong to its owner, but serves as collateral. Collateral is a guarantee that the debt will be fully repaid on time.
Auto loan requirements
To get a loan, you will need:
- Proof of identity;
- Proof of income;
- Proof of residence;
- Proof of insurance;
- Vehicle information;
- Credit and banking history;
- Current vehicle registration (for trade-in);
- Method of down payment.
Benefits of auto loans
- Higher vehicle resale value;
- Lower interest rates;
- You won’t end up paying more than the car is worth;
- You may choose a more expensive car;
- Lower down payment required;
- Your money doesn’t have to be tied up.
So, should you take an auto loan?
The answer to this question is always individual. However, there are a number of cases when taking an auto loan is more profitable than saving for it.
- A sharp rise in prices. If the market value of a car is growing rapidly, and income is noticeably lagging behind, it will take a very long time to save up for a car. In such a situation, a car loan is the best solution;
- Auto for work. In this case, you can unequivocally answer the question of whether it is worth taking a car loan: of course, yes. A car that is used to earn money will quickly pay off the overpaid interest;
- Transport issue. For those who work outside the city or in a city where transport runs irregularly, a car is a must. It is also very necessary if you have to get to and/or from work at night. In such a situation, you can safely get an auto loan;
- A unique car. Is it worth taking a car loan if you do not have enough money, the car is very rare, and someone else will quickly buy it. In this case, an auto loan can make a dream come true. A quick online loan will help you not to miss the chance.