The concept of a car loan is a sound one. You need a car but you do not have the cash to buy one outright. However, you have an income and you can pay for the car in monthly installments. It follows that if a bank or a finance company can advance you cash, you can repay the loan in convenient installments. Below are some things you should know about car loans.
Secured Loan
In most cases, the car loan falls into the category of the secured loan. This is because the vehicle itself is the collateral for the loan. You have taken delivery of the car even though you have not finished paying for it. However, if you fail to repay the loan, the vehicle could be repossessed by the lender. The car is sold off and the cash is used to repay the loan.
Loan Cost
Many people know that when you take out a loan, you repay the loan with a bit of interest. However, the interest on the loan is not the only cost the borrower has to bear. For most car loans, there are charges and these charges fall under the category of loan costs. These costs include fees like bank charges, taxes, stamp duties, title costs and the like. Some of these charges like taxes are non-negotiable. However, other costs like origination fees and delivery charges are negotiable.