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Types of Auto Loans: Find Which Is Right for you

Stampede Auto

July 10, 2023

Loans & Financing

You have found the perfect car, but are you sure it will fit your budget? Before you sign on the dotted line, let’s examine some of the most common types of auto loans and how they work.

New Car Loans

Banks and credit unions offer new car loans. These loans have a higher interest rate than used car loans and will be more expensive in the long run, but they also come with lower monthly payments.

The main benefit of a new car loan is that it allows you to buy a brand-new vehicle without paying thousands of dollars upfront. You can just take out the loan and gradually pay off your new ride.

Auto Refinance Loans

You can refinance your auto loan if you have a higher interest rate and want to lower it. This is best for people who don’t want to pay more than they have to or who are looking for longer loan terms.

If you have good credit and a solid income, refinancing is an easy way to save money on your monthly car payment by reducing interest rates and extending loan terms which usually results in lower monthly payments.

Used Car Loans

Used car loans are an excellent option for those who want to buy a used car. If you want a more affordable financing option, everyone approved car loans Calgary are the way to go.

Used car loans have lower interest rates than new car loans because they don’t include as many features and extras. They also have shorter repayment periods than new auto loans, so if you need money quickly, this could be an option worth exploring.

Lease Buyout Loans

Lease buyout loans are used to pay off a leased vehicle. If you have a lease on your car that is coming up or are considering buying out the remainder of your current lease, this option may be right for you.

A lease buyout loan can also be used to pay off an auto loan or another type of loan where collateral has been provided. The lender will want proof of ownership before approving any application, so ensure all documentation is ready when applying.

Private Party Auto Loans

Private party auto loans are used to finance a car purchase from a private seller. The borrower is not a dealer but an individual selling his or her car.

You can use these loans to purchase any type of vehicle, and do not require you to have your own home as collateral. However, because they are riskier than conventional financing options, they come with higher interest rates and fees that may add up quickly if you don’t pay off your balance in full each month.

The Bottom Line

If you’re considering getting a car loan, knowing your options is vital. Many types of car dealerships low credit exist, and each one comes with its own set of pros and cons. Know how each type works before deciding which one is right for you.

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Our dealership has been Serving Calgary Alberta since 2013.

We specialize in used cars and always try to get the best deals for our customers.

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