Auto Loans on the Rise
In the last two decades, the auto industry has seen a lot of growth - in their clientele as well as the manufacturing companies
. However, the most interesting aspect of the two is the client growth. Now, cars have come down from an object of fascination to an object of desire to a simple every day commodity. However, like all commodities, cars have a lot of use and they are used a lot. But even with their use, cars come at a good price and that price cannot be afforded by all. Auto loans help those people who can't afford the exorbitant price of their cars and desire some help.Auto loans are similar to mortgages although the loan price and the term are quite low. The probable borrower applies to a lending institution stating his/her desired loan amount and the social security number. The institution checks with the credit bureau regarding the person's credit report which details all lending and borrowing activity of his. If the lent money has been paid back on time, then the credit score is highly positive which means that the chances of loan getting repaid on time are good. This is a good sign for lenders who can approve the loan at a decent rate. However, as the score reduces, the risk for the lender increases which also reduces the chances of loan approval. The less chances of loan approval are countered by a high interest rate.
When the auto loans are approved, then the applicant is either given the finances to buy the car of his/her choice or given the car by the dealership. The loan has to be repaid every month or after four months for the rest of the loan term. The interest charged is added to the loan amount and then divided by the loan term. This installment becomes the main figure in borrower's life for next few years.
Auto Loans on the Rise
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