A car loan can be quite confusing, with so much information and options on the market. A car loan is a term used to describe the many different ways that you can borrow money to buy a car. Depending on your credit score and other factors, you may be able to get a loan with no down payment, a low down payment, or even no credit check at all!
There are several types of car loans, so it’s important to know what each one offers before choosing one. Here are the most common types of best car loans and their features:
Image Source Google
- Car loan with no down payment: This is the simplest type of loan and allows you to purchase a car with no money down. You will need good credit and proof of income.
- Car loan with low down payment: This type of loan requires you to only pay a small down payment on the car. The rest of the cost can be financed through the loan. Down payments range from 3% to 20%.
How do car loans work?
When you borrow money to buy a car, you are actually borrowing money from a lending institution. The lending institution will give you a loan in exchange for an ownership interest in the car. The terms of the loan will depend on your credit score, the amount of equity you have in the car, and the interest rate offered by the lending institution.
Most car loans are term loans with a set period of time (usually around 6 or 12 months) and an interest rate that varies with the market. After your term has ended, you may have to make balloon payments or pay off the entire loan at once.