Things to Know Before Taking an Auto Loan
Car loans are meant to provide emergency loans for people with bad credit but have equity in their car, with the of the car in their name. Having equity in your car means that you own the car outright without any lien on it. Car loans are also called pink slip loans. Car loan is a way to get fast and quick loans because it does not require any credit check since you are borrowing against the equity of your car. We will look at 2 things you need to know about taking out a car loan.
1. High Interest Rates
Car Loans have high interest rates because the lenders need to find a way to manage the risk involved since most borrowers are high risk borrowers without good credit score. Therefore, the interest rates for this type of loan can be as high as 25% per month. This will translate into an Annual Percentage Rate (APR) of around 300%. That is higher than interest rates that you will get with other forms of loans including credit cards. When you wish to get a car loan, get offers from as many lenders as possible, so that you can compare the rates to get the best offer.
2. You can Lose Your Car
Before you take out a car loan, it is important that you look at options at your disposal, if it is possible to get a loan from friends and family try that first. Let taking out a car loan be your last available option because of the risks involved. If you fall into the hands of predatory lenders, it can even get worse. Hence it is important that you do your due diligence by reading reviews about lenders before you do business with them. Learn more at https://www.creditkarma.com/shop/autos/