Financial institutions advertise auto loans with affordable monthly payments, flexible repayment terms, and competitive interest rates. The terms vary depending on different factors such as your income level, whether you are a salaried employee or self-employed, and others.
Financial institutions offer financing for different types of vehicles, including cars, aircraft, motorcycles, boats, yachts, and others. Customers who want to secure a lower interest rate apply for secured loans which are safer for banks. Given that the car is pledged as collateral, the lender has the right to seize and sell the vehicle. Unsecured loans are also offered by banks and credit unions, but the interest rate is higher. Some finance companies also advertise low interest rates, but the repayment period is very short, and the monthly payments are larger. The borrower’s credit history is an important consideration, showing loan amounts, types of credit used, and so on. If your credit score is tarnished, your application may be declined. You may want to apply for a secured loan if your credit score is less-than-perfect. 
A family member, parent, or friend is your first choice if you apply together with a cosigner. If you are a member of a credit union, you may want to visit your local branch first.
The interest rate also varies depending on the repayment term, i.e. 36 months, 48 months, 60 months, etc. The borrowing limit is also an important factor.
How to Apply
Before you make a decision, consider factors such as the amortization schedule, fees, the down payment, etc. Borrowers who offer a larger down payment are offered attractive deals. The term usually varies between 3 and 6 years. Borrowers who opt for a longer repayment term benefit from affordable monthly payments, but they pay more in interest in the long term, which increases the cost of borrowing. If you are self-employed, you may have to present your individual income tax returns and other documents. Make sure you bring the required supporting documentation with you. Financial institutions that offer unsecured loans have more stringent criteria.
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There are different lenders to choose from, including online banks and brick-and-mortar lenders. Your lender will run a credit check to assess your creditworthiness. To make a decision, you may want to compare different loans and interest rates or use an online calculator. They calculate your payment based on your down payment, car price, APR, etc. This is a good tool to find out whether you will be able to meet your monthly payments. Check other options as well, including leasing and car title loans.
