Secured Loans

Hi,
Some of the most common secured loans we encounter at one time or another are car loans. Generally car loans are financed in one of three ways:
1) Banks or Credit Unions: the first place to investigate for a car loan. When dealing with your bank, the ideal situation is to get pre-approved for a specific amount before you go shopping for a car. This will allow you to take advantage of the most favorable credit terms and will solidify your financial history with the bank. Inquire to see if your bank carries an inventory of repossessed cars, which are usually favorably priced. Also banks sometimes have relationships with car rental companies and offer special loan rates to their customers for car rental purchases.
2)Major Dealer Financing: Dealers advertise auto loans at incredibly low interest rates that often seem lower than banks or credit unions. The reason for this is that they can inflate the cost of the vehicle. Another way they off-set the cost of their low interest rates is by giving people less for their trade-in. For higher credit risks, dealers often promise financing no matter what your credit history. Generally, they shop various finance companies until they find one that will take your loan. The interest rates on these loans are typically the highest of all car loans.
3) Independent Car Lots: These establishments will generally offer financing in any way that will seem to work to you, the consumer. They offer payment schedules by the month, by the week, and probably somewhere in the country, by the day. Their financing is generally very high risk, and they operate on the principle that with the exorbitant interest rates they charge, they can afford to have an high default rate and high repossession rate. This is not to say that independent car dealerships are not a good place to look if you are paying cash for a car.
As in dealing with all types of credit, car loans are no exception. If you are having problems paying your car loans, contact your creditors as soon as possible.
Tomorrow, I'll introduce the topic of mortgages.
Until then,
Alan