Auto Loan Options that Make A Real Difference to Repayment Costs

Finally getting the car we have had our eye on is a great feeling, but there is little doubt that it was the auto loan that made it possible. The prices of new cars are simply too high to save for, and the realities of the automotive market is that a new car is at least preferred every few years.However, loans for automobiles are not precisely the same as other loans issued by lending banks and financial institutions. There are two ways of getting a loan. The first is a loan for direct auto purchasing, which effectively means that the loan is attained independently, before finalizing a purchase agreement.The second kind is a loan from auto dealerships, which is a common choice because of the convenience of not having to wait on a bank to approve the loan before getting the car. Which ever kind is chosen, however, there are positives and negatives that should be considered, not least because of the effect they may have on the repayments structure.Choosing Direct FinancingGetting an auto loan independently from a bank or lending institution definitely has its advantages. For one, the institution is rather adept at calculating the most competitive deals, ensuring that any loans for automobiles is set to feature extremely attractive terms and lower interest rates, like loans for any other purpose.A second advantage is that, in the case of loans for direct auto purchasing, the repayments are generally less because of the absence of the middle man. With an intermediary, a fee is typically charged when a consumer seeks a loan from auto dealerships, which will increase the interest rate, or principal loan sum.However the negative aspect to consider is that by seeking a loan independently, the whole transaction surrounding the automobile purchase is fractured. Even if a buyer finds the car they want, they may not be able to secure the auto loan they need. From the point of view of the lender, what is to be purchased has little to do with approving the loan.Going with the DealershipOn the other hand, securing loans from auto dealerships tends to be an easier task as the sale of the automobile is a key aspect for the dealership themselves. It is understandable then, that the minor doubts that may otherwise swing the approval decision against the applicant will be overlooked by the dealership. And since, as an intermediary, an added charge can be earned, they stand to lose a little more if they are overly strict.Also, when auto loans are issued by the dealers, the entire transaction is kept together, making everything much more manageable. True, there is the added fee to pay but this is offset by more convenience and centralizing the transaction.Of course, it is the added cost that is the main disadvantage of getting loans from auto dealerships. In trying to secure the best deal possible, it is certainly counter productive. And with loans for automobiles typically available for 24 or 36 months, the total value of that added percentage cost can turn out to be several thousand dollars.Another point to remember is that auto loans are not so difficult to get because the automobile itself is often used as the security for the loan, much in the same way that a property is used when getting a mortgage.However, this is not always the case, making an unsecured loan necessary, which requires satisfying a different set of criteria.