What Is An Auto Loan?
An auto loan is a type of personal loan for auto financing. There are many national and local financial institutions that offer car loans.
Advantages of Auto Loans To The Borrower
Whether you are searching for a new auto loan or want to refinance your existing one, there are many benefits to obtaining a loan for a car. For instance, as you make on-time payments for your auto loan, you will be boosting your credit rating. Just by obtaining this type of loan, you will be adding to your credit mix which will raise your credit score. You can also refinance your auto loan by negotiating with new lenders and maximizing the use of your credit rating which can lessen your interest rate thereby saving you money.
In some cases, when one wishes to take out a loan for an automobile, the car can be used to secure the loan just like a mortgage is secured by a house.
Types of Auto Loans: Direct And Indirect
A direct auto loan is when a bank will give the loan directly to a borrower whereas an indirect auto loan is when a car dealership will act as an intermediary between a bank or financial institution and a borrower. Since the car dealership will most likely require a percentage of the loan amount for handling the paperwork and arranging the loan for the borrower, it will be cheaper for the borrower to get a loan directly from the bank.
A pre-computed auto loan is when interest and principal payments are pre-calculated prior to the borrower and lender agree on an amount and sign the paperwork. Although this type of loan was popular in the past, most people do not use this type of financing now since it does not allow for early repayment of the loan.
The most common type of auto financing today are simple interest loans. The interest rate is based on the outstanding balance of the loan which is similar to a credit card. By paying more than their standard monthly payment, borrowers can save on interest costs.
Car Loans In Relation To Loan Brokering
A loan broker acts as an intermediary between a borrower and a lender. A loan broker will deal with autos, vans, SUV's, trucks, truck campers, ATV's, camping trailers, recreational vehicles, motor homes, boats, yachts, watercrafts (Sea-Doos, Ski-Doos, etc.), motorcycles, snowmobiles, and aircrafts. Depending on the type of vehicle, earnings for a loan broker can be highly profitable.
With our high-income loan broker business program, we can provide you with step-by-step, easy-to-follow instructions on how to arrange car loans for your client and provide you with a list of lenders. It only takes about 10 days for you to get started as a high-income loan broker.
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