Used car loans are best for buyers who cannot afford to purchase a new car. So many times you want to buy one thing and end up buying another. There can be many reasons for the deviation but the major influencing factor is usually money. If you have less money in your pocket there is no reason to be disheartened. You can still get a loan for your used car and the price of the car is going to be low as well. You just have to make sure that the model of the car is not older than 5 years.
Secured And Unsecured Loans Explained
You can apply for secured as well as unsecured used car loans. But there are many benefits if you opt for a secured car loan. When you decide to take a secured loan you have to offer a property in lieu of the loan you are taking. Placing collateral for your loan assures your lender that the loan will be paid on time. For this reason, your lender offers you many convenient terms like longer duration of loan, lower rate of interest, and a larger amount of loan, to make your repayments as relaxed as possible. If you still default in payment your lender can forfeit your property.
On the other hand, if you do not have collateral and you apply for an unsecured car loan, you have to pay a higher rate of interest and you also get a smaller amount of loan. Depending upon your income and type of loan for which you apply, you can get used car loans of $1000 to $5000. The interest rate charged for such loans is around 20%. Even if you have a bad credit score you can still apply for used car loans. Since the amount of loan required is low you can easily get bad credit car loans for used cars.
If you are diligent in making your repayments you still pay less in the longer run, by opting for car loan refinancing. You can apply for refinance if you find that you are getting a lower rate of interest for your loan from a different lender. This procedure is simple as well. All you have to do is take a loan from your new lender and pay off your old financer. This way you will be paying a lower monthly installment for the remaining amount of your used car loans.