A Car Loan Can Put You in the Driver's Seat
Everyone wants to buy a car. For some, it is a need and for others,
it is a luxury. It is not possible for everyone to buy a car. When
you do not have money to buy a car, you can get a car on lease.
In case of a lease agreement, you pay monthly rentals for a fixed
time period. At the end of this period, you have to return the car.
Another option is to buy a car on hire purchase. In this case,
you pay a small amount as down payment. The rest of the amount is
repaid in the form of monthly installments. The car dealer charges
interest when he sells a car on hire purchase. The advantage that
a hire purchase agreement holds over a lease agreement is that you
own the car once you pay up the price of the car along with the
interest amount.
You can also take out a car loan to buy a car. The rate of interest
on a car loan is higher than the rate on hire purchase. Car loans
are mostly secured loans. You can offer your car that you are buying
as a security. If you fail to repay the loan, your car may get repossessed
by the lender. If you are a homeowner, you can offer your house
as collateral to obtain a car loan. The rate of interest on a loan
secured against a car or a house is lower than the rate on an unsecured
loan. If you do not want to risk your property, then you may get
a personal car loan. Personal car loans are usually unsecured and
carry higher rates of interest.
Some people suffer from bad credit history. A bad credit history
includes arrears, county court judgements, default, bankruptcy,
etc. You acquire a bad credit score if you fail to repay a loan
as per the loan terms. Late payments also contribute to bad credit
score. People with a poor credit score may also want to buy a car.
Lenders offer bad credit car loans to such people. The rate of interest
on bad credit car loans is very high. Therefore, it is advisable
to take out a secured bad credit loan to keep the interest rate
at a low level.
compiled by: Vipul J
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