What are Car Loans?
A car loan is similar to a personal loan in the manner that it is usually an unsecured loan, meaning you don’t need to offer security for the loan. The interest rate on these types of loans are generally higher than a home loan as the car that is being purchased will go down in value. This means that the lender will be facing a higher level of risk if you cannot make the payment.
Why have a Car Loan?
Car loans are most commonly used if you cannot afford to pay for a car outright. There are however reasons to get a car loan even if you have the cash available. These can include increasing your credit rating and not using up all of your savings that may be needed in an emergency.