Car loans can definitely ease the financial burden

By: Sunil Punjabi

In past decades, owning a car was only for the rich and few, due to the lack of financing options and low fuel efficiency. With new models with high fuel efficiency and better option in car loans, more people are now buying cars. This is definitely good news for the car manufacturers as well. With the outsourcing of car manufacturing to different parts of the world, the production numbers soar rapidly. In order to increase sales, the manufacturers targeted a new segment of prospective buyers, who had money but not enough to make an outright purchase. In order to lure this segment, which formed a large percentage of the economic class, the car loans were introduced.

Since the cost of cars is really huge, not many could afford buying it with cash down option, or simple break up. With the limited payment options the car companies were loosing out on lot of clients and also limiting their sales. Therefore, the banks and private institutions stepped in; car loans are also good business for these financial companies. Since most of the repayments last up to 5 years hence financing such loans are good propositions.

There are other aspects contributing to increased car purchases. The increasing fuel efficiency of the cars, with better technology being used, is one of the reasons. Thus, the thought of using a car and the high maintenance cost was a deterrent, even though car loans made it easier for people to buy a car. With better fuel efficiency, more people can now afford to use a car and maintain, it without much sweat. Also in recent times, there are better after sales services, servicing centers are present in every part of the country, making it easier for anyone to maintain a car. The impact of this higher fuel-efficient cars, better servicing facilities and car loans has had a positive impact on car sales, all over the world. It has also meant that the dream of a less affluent society to own and move in a car has become a reality.

The car loans can be of two types, the secured loan and the unsecured loans. Secured car loans are those for which the buyer has to keep a collateral security with the bank, in order to get the loan. Since there is security against which the loan is offered, hence the interest rates would be lower. The unsecured car loans do not necessitate a security deposit and solely depend on the financial documents of the individual seeking loan.

Since there is no collateral security to fall back on, in case of bad repayment, the interest rates charged could be higher than the secured car loans. The loans usually finance up to 90 percent of your loan amount, however, it is advisable to pay a higher down payment, so that the total interest component is reduced. The car loans available in Canada also offer hope to the individuals with negative credit scores. Though the terms of availing the loans would be stricter than the people with good credit scores, but one is not denied a loan. The credit scores improve as the timely repayment is done. Essentially, there are car loans for every need and every one.

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