A person wishing to buy a car does not have to wait for years like he once had to. He does not have to let his savings accumulate till such time that he has enough to buy the car. Today, all he has to do is obtain a car loan. Obviously, he would want low interest car loans, so he would have to shop around looking for the best deal.
Car loans are available from various sources ranging from the automobile company which manufactures the car to a commercial bank.
Automobile companies generally have their own consumer credit division which provides car loans to customers. The main advantage for the car buyer is that he can conclude the car purchase as well as the loan transaction at one place – the dealer’s office. Also, the dealer would help the car buyer with the paperwork. The interest rates offered on such loans are not always low but automobile companies sometimes do offer special car financing whereby low interest car loans are available. Such schemes are usually introduced when the company finds that many units of a particular car model are lying unsold or a new car model has been introduced which has resulted in the old car inventory piling up.
Commercial banks also offer low interest car loans. It is not enough if the car buyer makes loan inquiries with just one commercial bank. There is a upper limit for the interest rate fixed by the government for these loans. There is huge competition in this business and so banks charge rates much below this ceiling.
The bank where the car buyer has a savings account also allows him to take a loan where his savings are the collateral. These are also low interest car loans. The amount in the savings account however has to be higher than the loan amount. Once he takes a pass book loan, the borrower cannot withdraw the money to the extent of the loan from the savings account. But the money in the account will continue to earn interest.
If a person has taken a certain type of life insurance policy, he can borrow money up to a certain extent of the policy amount called the loan or cash value. Car buyers holding such policies can borrow low interest car loans backed by these policies. So the life insurance policy is the collateral for these car loans.
People not wishing to run around searching for low interest car loans can look for them online. A car loan borrower can look for online car loan lenders and study the loan terms which they mention on their web sites. Alternatively, there are car loan websites which have tied up with many lenders. The borrower could register on such sites and compare rates and terms of different lenders.
Comparing interest rates of different car loans can be cumbersome. It is not enough to look at interest rates only. One will also have to compare other loan expenses like fees charged by the lender. To simplify matters, the borrower should ask each lender for the APR or the annualized percentage rate of the car loan. This would facilitate easy comparison.
Though the lender may try to push the borrower into taking the car loan, the borrower should take time to study of the terms of the loan. He should then decide the best among the different low interest car loans available.
Low interest car loans are a great advantage for the car buyer. Though the monthly saving of interest by taking such loans may look like a small amount, it would add up to a huge sum if all the installments are considered.