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All You Need To Know About Auto Loans

As soon as your car dealer comes to know that you are considering auto loans to buy your car, they will start persuading you to take your loan through them.  However, you need to know that the dealers rely on their own financers for the loans they offer. And in the process they mark up interest rates by as much as 2-3%, which amounts to an extra profit for them while you end up paying more.

Banks and credit unions, on the other hand, have become more rigorous these days in approving auto loans due to credit crunch in the present state of the economy. If you don’t have a high credit score, it will be very difficult to get your loan approved by them.

An important consideration with car loans is that the car you purchase becomes a depreciating asset, with decreasing value, as soon as you start driving it. Therefore, unlike residential houses, it is not reliable collateral. Therefore, the financial institution that provides you the loan is not banking upon the car as collateral but in your ability to repay the loan by the due date. That’s why credit history becomes such an important issue and those with low credit scores are often denied auto loans.

An alternative to banks and credit unions these days is the internet. There are many companies offering auto loans online. The process is simple and approval instant. The only requirement on your part is to do your research to get the best deal possible.

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