What is an Auto Loan?

An Auto loan is basically another name for a car loan. An auto loan is an agreement between a lender and a borrower in which the lender gives the borrower money and the borrower promised to pay back the amount of the loan and the interest. Auto loans are only offered for the purpose of purchasing a vehicle.

Auto loans are the most popular type of loan that people apply for. Auto loans, as the name suggests, are unsecured loans specifically designed for the purchase of a vehicle.

An auto loan is a type of credit offered by a bank or other lender for the specific purpose of buying a vehicle. You then pay back the loan over a set period of time.

If you are taking out an auto loan it is very important that you find out the Annual Percentage Rate (APR) that the lender is offering. This is the yearly charge for the loan, a low APR means a cheaper loan.

The payments you make consist of both the principal amount of the loan plus interest. With this type of loan you own the vehicle from the time you buy it. Auto loans are form of personal loan of which there are several basic types with slightly different conditions attached.

Auto loans can be seen as the riskiest of loans from the lender's point of view. This is because an auto loan is for an asset that depreciates very quickly. Thus you will find that auto loans have generally a higher rate of interest than any other type of loan.

One of the advantages of getting an auto loan is that when you get it before you go to the dealer, you can negotiate as a cash buyer. Often you will save money when you negotiate from a cash buying position.

The main disadvantage of an auto loan is that, like any other loan, it must be paid back. Before you get a loan, make sure you are capable of making the monthly payments. You can seriously damage your credit if you default on an auto loan.

You may freely reprint this article provided the author's biography remains intact:

About the Author

John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the www.directonlineloans.co.uk website.

Romney quiet on hopes for No. 2 spot (Detroit News)
DENVER -- Michigan native Mitt Romney declined Tuesday to discuss his vice presidential hopes -- or to support the loan guarantees for the auto industry that have become an increasingly important feature of the presidential campaign in battleground Michigan.

Color of Money Book Club (Washington Post)
Personal finance columnist Michelle Singletary hosted an online discussion with Carolyn Warren, author of "Mortgage Rip-Offs and Money Savers" (John Wiley & Sons), on Thursday, Aug. 28 at Noon ET.

How to get the best loan rates (Bankrate.com via Yahoo! Finance)
Learn about the forces that drive rates on several different types of loans in this tough lending environment.

ENERGY POLICIES: Joe Biden blasts McCain on auto loans (Detroit Free Press)
Democratic vice presidential hopeful Joe Biden wasted no time Monday in hitting Republican presidential candidate John McCain on auto industry issues, saying McCain does not fully support the industry's bid for $50 billion in government loans.

Let's Chat Today (Washington Post)
Join me today at noon for a live online discussion about mortgages. The current housing market has sidelined many would-be buyers, who are worried they'll buy before the market hits bottom. Meanwhile, mortgages rates are rising and qualifying for a mortgage is more difficult.

Home page

Information Index