Types of Auto Loans

We understand choosing a new car can be a bit overwhelming. In addition to all the vehicle choices, there are just as many ways to pay for a car: cash, trade-in, car loan, or a combination thereof.  If you buy an older car, or buy a car from a private party your options can diminish; in some cases you may pay a higher interest rate than advertised.

Don't let financing a vehicle take away from the excitement of buying a new car. Let us go over a few different ways you can pay for your next car, and help you walk on the car lot better prepared.

 

Mount Vernon Bank & Trust Auto Loans

Contact one of our lending specialists and let us guide you to an auto financing solution that is right for you. We can also pre-approve you for a loan before you hit the car lot knowing exactly what you can afford. Here we have outlined just a few different options for financing a car.

Few types of car loans

• Car dealership loans: Although a sign and drive car loan may be quick way to take that shiny new or used car off the lot, in the long run these may not always be the best deal for you, the customer. It is not uncommon for dealerships to add little interest on top of the loan rate, as their commission for arranging the loan. Coupled with the loan's long term to keep monthly payments down, over the course of the loan, you may end up paying much more in interest than if you had gotten a local bank loan! These car loans are typically serviced by third party banks, rarely local branches. Besides taking your money out of the local area, customer service may involve extended hold times on the phone.
• Bank Car Loan: When choosing to finance your car purchase through a bank, you may have more options as to the terms of the loan, and you are afforded the opportunity to shop around on rates. If choosing a local bank for your car loan, you can be assured your money stays locally, and service will typically be better.
• Home Equity Line Of Credit: With a Home Equity Loan, you borrow against the equity in your house. Using an Home Equity Line of Credit to finance your car has several advantages and disadvantages: Depending on the term of the Home Equity Loan, you may end up with lower payments thanks to a longer term. Additionally, interest paid on a Home Equity Loan may be tax deductible. Needless to say, you need to own a house before you are eligible for this type of loan.