The world of Auto Loans and Financing
There are so many different kinds of auto loans out there. Many of these loan types are very similar to each other. Most of them involve credit checks, paperwork, and lots of explaining. This guide will showcase 5 popular types of auto loans.
Pre-computed Auto Loans
A pre-computed loan is a simple loan type that combines the amount owed with a predesignated amount of interest. The interest and principal are both pre-calculated before the lender and borrower sign any paperwork, and they cannot be changed at any time. One would say that they are locked in. An obvious plus to this type of loan is that both parties know what to expect. A downside is that the borrower does not gain anything by paying the loan back early.
Simple Interest Auto Loans
A simple interest loan is almost identical to a pre-computed loan, except that the interest is always changing. The interest is is calculated off of the balance owed to the lender. This means that the interest owed changes with every payment you make. A perk to having this kind of loan is that you can save money by paying it back early.
Secured Auto Loans
A secured loan means that you are offering collateral, or something as a guarantee, that the money you are borrowing will be payed back. Collateral for an auto loan is generally a second vehicle that the borrower already owns. The vehicle or item being used as collateral must be owned outright, meaning it cannot have a loan already against it. These type of loans are often used when a buyer has bad credit, or a history of not paying their debt. The upside to this kind of loan is that they are easier to get. The downside is that the lender can take possession of your collateral if you fail to pay back what you owe.
Unsecured Auto Loans
Unsecured loans are a favorite among many vehicle buyers. An unsecured loan means that a lender is loaning you money based on your reputation alone. The upside to this kind of loan is that there is very little risk involved for the borrower. The downside to this kind of financing is that it’s usually paired with a higher interest rate. People looking for this kind of loan must have established credit and a great history of paying their debts.
Refinancing Auto Loans
Car refinance loans are loans to pay back loans. This type of loan is used to pay back a lender, while becoming indebted to another lender. This kind of auto loan can be used is to swap out for a better interest rate or a lower payment. Refinance loans are commonly used for property, vehicles, and even general debt.
Brevard Value Motors is ready to help you choose the right financing option!
Brevard Value Motors is located in Melbourne Florida and offers several financing options to potential buyers. They work with their customers to find the best option that will meet their needs. They offer traditional and in house financing, which allows them to approve anyone! Give them a call, send them an email, or stop by and speak with one of their friendly professionals.
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