Every person desires of having a new car. But sometimes due to limited income his desire of having a car remains as it is. And, he seeks the ways from where he can finance his car. Financial market provides various options to the person to get his car financed. One of the most feasible and affordable way is new car loans.
New car loans can be availed in two forms; either secured car loan or unsecured car loan. In the former, the borrower is obliged to keep collateral with the lender. The collateral makes the lender feel secure against the risk of non payment of instalment as a result of which the lender tends to offer lower rate of interest. Thus, the collateral reduces the cost of availing a new car loan. On the other hand, in the latter there is no such obligation to place collateral. But, if we compare these two forms; the secured form of new car loan offers lower rate of interest than unsecured form of new car loan.
In the secured form, a car itself act as collateral and if somehow, the borrower fails to repay any instalment; in such case the lender will take possession of car in order to realise his payment.
Here, the rate of interest is determined by taking into account certain factors such as financial status, credit score and the rate prevailing in the market.
While going for new car loan, it is suggested that person should shop around in the market in order to avail reasonable loan deal. The person must not forget to consider his financial ability to repay an amount of loan. Missing or late payments can put his new car on risk and will adversely affect his credit score.
Annual percentage rate (APR) that is, sum of interest rate and cost must be compared with the APR of other loan offers. It will help the person in availing competitive cost loan deal.
The person should always try to make high down payment as it reduces the subsequent loan amount, which results in bringing down the amount of monthly payment.
Go through all the small prints of the loan agreement. And ensure that the agreement of new car loan doesnвЂ™t have any hidden cost because, these hidden cost increase the cost of the loan.
If the person considers all above points while availing a new car loan, it is sure that the best new car loan deal will come his way.
While going for new car loan, it is suggested that person should shop around in the market in order to avail reasonable loan deal. The person must not forget to consider his financial ability to repay an amount of loan. Missing or late payment can put his new car on risk and will adversely affect his credit score.