While opting for finances for your car, it is important to choose an appropriate lending option. Often there are confusions regarding, whether to go for direct lending options or for the dealership financing. Both of these have their individual advantages and lacunas. However, as per the financial advisors, the direct dealing options turns out to be better of the two as you will be charges a low rate of interest and flexible loan term. Finance institutes like credit unions, banks and other financial companies provide these finances. The nature of the loan is such that you need to pay the interest rate, the balance amount and also a fee levied on the loan amount.
Scope of interaction with lenders
These lenders provide attractive offers related to interest rate, loan term and the monthly installment. The rate of interest charges by these lenders can vary, so it is important to do some amount of homework regarding the same as it ensures that you will get a competitive rate of interest. In direct lending, you have the scope of shopping around for the loan. You can interact directly with lenders and get in depth information about different features of the loan for the car that you intend to buy.
Pay directly to lenders
Another important aspect of direct lending is that you can know the terms of the loan well in advance. The loan term, rate of interest, monthly payment and additional fees are informed to the applicant during the phase of comparing the loan. If the loan suits your budget, you need to sign a contract or agreement with the lender citing the terms and features. After you have decided on the car, the proceeds from the banks, credit unions or companies go to the dealers directly for purchasing the car. In this case, lenders possess the lien of your car, till you have paid the loan amount in full.
Avail attractive deals
Generally, the duration of these loans range in between thirty six months and ninety six months, depending on the principal amount. With a lengthy loan term, you can lower the amount paid through monthly payments, but a high rate of interest will be levied on you. These terms solely depends on your credit history and credit score. With a good credit score, you can secure a good loan amount and interest rate. Few lenders also have the provision of discounts on loans, for the convenience of the borrowers. The monthly installment that you need to pay is deducted directly from your checking account.
Secure funds early
For an informed shopper, the first step of acquiring finances is to secure the availability of funds first. With a clear projection of the loan amount, interest rate, loan term and monthly installment. In case of dealer financing, you fail to get the exact loan amount as the dealers levy additional charges on the loan amount and ultimately you need to pay exorbitant amounts. On the other hand, if you opt for direct financing them you need not pay extra charges and you can save some money. So, if you are considering to obtain cash for junk cars or for the new one ones, the direct lenders are a good option to look for.
Important factors to consider
Irrespective of the lending option that you have opted for, there are few factors that you need to consider prior to the purchase of the car. First is the Federal law that is applicable to the lending process. They give you the power to negotiate with the lender and strike a favorable deal. Next is the calculation of your financial condition to determine the amount that you can afford. Calculate the price of the car, and then determine the loan amount and the monthly installment that will fit your budget.
Author Bio: Elizabeth Sullivan had bought a car of late and here she has emphasized the advantages of direct lending over the dealership financing. These direct lenders also provide cash for junk cars for the convenience of car buyers.
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