Six common types of car loans

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What kind of car do you want? Can you afford to buy a new or used car? Do you even want to buy a car — or do you just want to borrow one for a few years? You can get Car loans.

There isn’t just one car loan out there for one kind of driver. The financing you need depends not only on your personal finances but also on what you’re hoping to get out of your loan. Though you’ll find unsecured car loans, most auto financing relies on securing your loan with the vehicle you intend to buy or refinance.

See also:  Find the best car financing for your dream wheels and your budget.

Most lenders offer a combination of the following types of lending:

  • New car loans. These fixed-term loans from a lender or dealership are used to cover the cost of your new car.
  • Used car loans. Similar to new car loans, these loans factor in your previously owned car’s mileage and age when determining your rate and term.
  • Private-party car loans. Term loans from lenders that allow you to buy a car from a private seller — rather than a dealership.
  • Lease buyouts. Fell in love with a car you’re leasing? This financing allows you to pay for the bubble fee at the end of your lease so that you can purchase it outright.
  • Auto refinancing. Trade in your existing car loan to reduce your monthly payments or pay it off more quickly.
  • Buy-here-pay-here loans. This last-ditch option helps people with poor credit avoid a hard pull on their report by financing their car directly through a dealership — but often with high interest rates and hidden add-ons.
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