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All About Auto Finance

Auto finance or a car loan is a repayable financial assistance offered to an individual who is interested in buying a vehicle. This loan is offered by various sources mainly banks, car dealers, credit unions and car financing companies. Terms and conditions for the issuance of this loan vary from one lender to another.

There are various categories of auto financing depending on the type and even age of the vehicle you would like to buy. Lenders offer delivery van financing, used car financing, dump truck financing, tow truck financing, commercial vehicle financing, limousine financing among others. Therefore, before you apply for the loan, you must choose the category of financing.

To qualify for the auto finance, your credit rating must be adequate. Your credit rating is determined by your history with debts and even your income. If you have a job with a stable income and you have been paying all your debts in time, your credit score is raised. However, if you have a history of credit defaulting and you are currently bankrupt, your credit rating definitely falls.

A good credit increases your chances of getting a car loan while a bad credit puts you at the mercy of the lender. Meaning, he can either disqualify you or subject you to exorbitant interest rates.

Car loans are also offered in two terms or duration; long-term loans and short-term loans. Long term loans will give you ample time to repay the amount with minimum monthly repayment though the interest is high in the long run. Short term loans on the other hand allows you a shorter time period to repay and the interest is relatively lower. So choose wisely.

Now that you know what auto finance is, maybe you could shop around and look for lenders to help you purchase the vehicle you were not able to buy.

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