Types of Financing and Features
Customers choose from different types of loans, depending on the down payment, fees and penalties, and other factors. Banks usually offer competitive interest rates but have stringent criteria. Your chances to get approved for a bank loan increase if you offer collateral. A chattel mortgage is another arrangement that requires movable property to be used as collateral. The minimal capital outlay is one advantage. There are also home equity and pre-computed loans, and the latter is an example of financing whereby the principal payments and interest charges are pre-calculated. Captive financing companies also offer loans to customers who plan to purchase a vehicle from certain auto manufacturer. Short-term and long-term loans feature flexible repayment schedules. A short-term loan comes with lower interest payments. Customers who opt for a long-term loan pay more in interest. Car loans are offered by banks, credit unions, finance companies, car dealerships, and other parties. Borrowers can choose from different options, including chattel mortgages, conventional loans, operating leases, finance leases, and others. Financial institutions offer unsecured and secured 
loans, and the latter require collateral.
Regardless of whether you choose a new or used car loan, read the terms and check for hidden charges and prepayment penalties. State and title fees may apply as well. The decision to buy an used or new vehicle depends on different factors, including the cost of the vehicle, brand, and others. Obviously, you will pay less for an older vehicle. There are online calculators that help borrowers to make a decision, depending on whether they take into account factors such as depreciation and their driving preferences. Other online calculators help calculate the monthly payment based on factors such as the term, APR, sales tax, trade-in value, down payment, and price. There are different factors to consider, including the interest charges, prepayment penalties, payment options available, and others. Banks look at your payment history, especially if you apply for an unsecured loan. Whether you apply for an used or new car loan, banks want to make sure that you will be able to meet your payments. Banks are also interested in your income level; so, bring your recent pay stubs with you. Lemon law and gray market vehicles are not financed.
Documents Needed
Usually, banks require documents such as proof of residence, proof of identity, and proof of insurance and income, as well as your trade-in documentation. Lenders are also interested in your employment history. The car’s mileage is also accounted for.
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