There was a time when possessing a car was a status symbol. Today owning a car is more a matter of necessity. For commuting, traveling, shopping, running errands, one needs a car. However, a car is expensive and not all can afford to buy it with one’s own money. But not to worry, car loans are easily available whether for buying a brand new car or a used one.
Car loans are secured loans where the security is the car being purchased. This means that if the borrower fails to repay the loan, the lender can take possession of the car and recover his dues by selling it. The rate of interest for car loans is lesser than that of personal loans because of the reduced risk to the lender, but a person planning to buy a car with a loan still looks for a cheap car loan.
Car loans can be mainly got from three main sources.
Many car buyers prefer to borrow car loans from dealers as the borrowing as well as the purchase can be done at the same place. But it may not be possible to get a cheap car loan as dealers would also want a share in the lender’s profit, pushing up the rate of interest.
Banks and lending institutions
These usually provide loans for buying new cars. A person who has done business with a bank or lending institution earlier can approach it for a car loan. He may succeed in getting a cheap car loan as the lender is acquainted with him and from earlier experience is sure that he would be repaid on time.
Online car loan lenders
There are many web sites which are linked to numerous car loan lenders. For instance, lendingtree.com. If you are wondering - “How can I get a cheap car loan?” all you have to do is visit one of these sites and look at the tables showing comparisons between car loans granted by various lenders. You can then select the cheapest car loan.