A List Of Five Standard Types Of Auto Loans

When you are looking for an auto loan you will sometimes hear many different types of auto loan terms thrown around without a whole lot of explanation. Well it may just help you in your search to know exactly what each type of loan is so that you know what kind of loan to look for and you can have an intelligent conversation about the various types of auto loans. So here is a list of five of the most common car loan types you will hear and a quick explanation of each one to help you understand their differences and maybe even their similarities.

- A buy here pay here dealership loan. This is the kind of loan you see advertised on television that is geared towards the people with bad credit or no credit at all. They are loans usually with extremely high interest rates that are underwritten almost completely by the dealership you bought the vehicle from. They are usually set up as monthly payments or, in the case of severely damaged credit, weekly payments. For loans such as this the penalties for late payments are harsh and the dealership will usually not give you many second chances to make your payments. They are helping you re-establish your credit but missing payments, or even paying late, can cause big problems.

- An online auto loan is exactly what it sounds like. An online auto loan is one where you apply and do all of your business for the loan on the internet. Of course an online auto loan brings up a whole bunch of security issues as it can be dangerous broadcasting your personal information over the internet. You can get some good rates with these loans but be very careful at who you give your personal information to and how often you submit your information for applications.

- A sub prime auto loan is another type of loan given to people with bad credit but this one is usually through a bank or some other sort of lending institutions. These come with high interest rates and strict terms as well but the sub prime auto loan has a little room for negotiation and allows you to try and work with the lender to get better terms. A sub prime auto loan is going to be expensive but if you are looking to help repair your credit then this is a great way to do it.

- When a lender refers to auto loan refinancing they are referring to the process of taking your remaining balance that you owe on an auto loan and giving you a whole new loan for that amount. Auto loan refinancing means you will have to pay another 5 years or so on your loan again, and you will owe a whole new loan's worth of interest, but auto loan refinancing can also cut your monthly payment almost in half in some cases. If you are having problems making your payments then this may be the way to go.

- Of course the last type of loan is the standard auto loan which is probably the best way for anyone to go. There are a variety of lenders available if you have good credit and if you are able to bring a sizeable down payment to the table then you should be able to negotiate some very nice terms to your loan.