Owning a four-wheeler is a dream for most of us and earlier not everyone could afford to buy it. However, now this dream of many can come true with car loans which are can be found from almost all the banks. This is considered a simple loan which can be easily availed with the help of financier where he pays the maximum amount of the car’s value and the buyer needs to pay a down payment. There are many financers who are tied up with manufacturers to offer attractive deals to the customers. Let us talk about the different types of car loans available these days and how one can benefit with them to the maximum.
Simple interest Loans v/s Pre-computed interest Loans
You can choose a car loan in accordance to the interest calculated. The pre-computed types are the type where the buyer needs to stick to a schedule of a set payment method in which each payment has a principle portion and a fixed interest amount. You need to be aware that even if you pay off the loan before time you do not save any money on the specific interest as the payments are applied according to the pre-computed interest schedule. These pre-computed loans will not work out for those buyers who intent to pay a loan early.
Simple interest loans are those which calculate interests daily. In this loan, the interest is calculated depending on the amount of loan. In case the borrower can pay off additional principal on the specific loan they are not required to pay off the interest on the principal which has been paid off. Borrowers opting for early payments can pay off the interest on these simple loans faster.
Unsecured Auto Loans v/s Secured Loans
For secured loans, a borrower needs to put a lien on a specific asset owned by him. Most of these secured loans tend to put a lien on the car which is being bought. There are other types of loans that put a lien on a house or another car which is owned by the borrower. Consumers need to have the required information on what type of assets they can put their lien on. With these loans, the lender can repossess the specific assets in case the loans payments are not made as per the agreement. This lien tends to lower the risk of default for the lender and enables the consumer to get a lower interest rate as compared to secure loans.
With unsecured loans, the lender cannot repossess any assets if the payments are not made as per the agreement. The lender will have to adapt other legal measures to ensure they are paid back the loan. This, in turn, leads to a higher rate of interest for the borrower.
Advance EMI Scheme
There are many borrowers offering this type of car loans. In these types of loans, you do not need to pay anything as you get the total cost of the car as a loan. You need to remember that with this type of loan you will have to pay almost 10 EMIs in advance and pay rest of the EMIs in the form of checks which are postdated. That is all you need to do to get this loan. If in case you do not pay the advance EMIs upfront, you are charged a higher rate of interest for the total amount of the car bought.
Owning a car is not a difficult procedure these days as you have multiple benefits offered by the different financers. With these loans, the buyers face fewer of additional expenditure.