Cincinnati Auto Loan Credit Repair
If you live in a suburb or in a place that is not as densely populated, having a working vehicle can be crucial to daily functions. Without a car it can be tough to get to work and make money. Sometimes, bad things happen and cars break down, get stolen, or we default on the loans that we used to buy the cars in the first place. Luckily there are lenders out there to make getting a car accessible even for those with poor credit. Here is some information about the types of auto loans that are out there and what can happen if payments are not made.
Common Auto Loans
Secured auto loans are loans where the car is considered collateral for the loan. An unsecured loan is a loan where there is no collateral and the lender is reliant on the borrower’s promise to pay on time. A simple interest loan is calculated based on the principal amount of the loan at the time the payment is made. Some loans have the interest divided into equal portions that are added to your monthly payments over the course of the loan.
Buying a Used Car
Sometimes buying a used car can be easier for people with low credit scores. Some dealerships provide in-house financing. This means that the payments you make go directly to the dealership where you bought your car. Used car loans are typically for shorter periods of time but will often reflect higher rates. This is because the risks associated with used cars are much higher than with selling cars of newer models.
Private Sellers and Buyouts
A private loan can be given to you if you are seeking a loan from a private seller and not from a dealership. There are certain risks associated with buying from a private seller, so it may be worth it to you to do a little research and find out if there is an outstanding lien on the car. If you have leased a vehicle, then at the end of your lease you may be offered a contract to purchase the vehicle. This kind of loan allows you to make payments on the lease until you own it.
If you can’t make payments on your vehicle and you don’t work something out with your lender, then if you continue to fall behind then you may end up defaulting on your car loan. Typically, this means that your car will be repossessed. If this happens, you may be able to get your car back by paying off the balance of the loan in addition to any fees. If you can’t pay it back, then your car may be auctioned off or sold to someone else.