English
SpanishThe Main Types of Auto Loans
Navigating the world of car financing can seem daunting if you don’t know what types of auto loans work best for you and your budget. Thankfully, Indy Car Financing can help get you behind the wheel with the right auto loan, regardless of your current financial situation or credit history. To help you get acquainted with the different types of auto loans and financing options available, we’ve provided this brief overview of popular methods for securing auto financing.
Types of Financing
When it comes to financing a car, there are generally two common methods of doing so. These are direct lending and dealership lending:
- Direct Lending: You receive a loan straight from a bank, credit union, or finance company and agree to their payment terms for the amount of money financed, as well as a finance charge. After entering a contract with a dealership to buy a car, a direct loan is used to pay for the vehicle. Direct lending allows you to comparison shop for the best rates and find out different credit terms before purchasing a new or used car.
- Dealership Lending: Instead of using a third party, you receive financing for your next car directly from the dealership. The dealership draws up a contract outlining how you will pay off your vehicle over a set period of time, as well as any finance charges. Dealership lending is convenient, since you can secure your car and financing all in one place, and dealerships offer special manufacturing incentives for lower rates.
Types of Loans
Shoppers have a variety of auto loans available to them that will allow for a seamless automotive purchase. A sampling of different auto loans to choose from includes:
- A pre-computed loan is the most common. Interest and payments are pre-calculated before a buyer and lender sign an agreement.
- A simple interest loan is a loan that calculates interest on a daily basis. This allows drivers to save on interest rates by paying more than their standard monthly payment.
- Car equity loans can vary, but essentially a borrower can receive a loan based on the equity of their vehicle. However, the likelihood of borrowing the entirety of the vehicle’s value is slim to none due to depreciation.
Find the Right Type of Auto Loan at Indy Car Financing
If you’d like assistance when shopping for different types of auto loans in the Indianapolis area, let the experts at Indy Car Financing help. We’d be happy to answer any questions you might have if you contact us at 855-468-6215.