Do you know how a car loan actually works?

Car loans are a type of personal loans, approved for the specific purpose of buying a vehicle. Most car loans are secured against that vehicle so if the borrowers defaults, the card may be repossessed. Car loans often have a fixed interest rate and a fixed term, usually 12 months to five years.

To get the best interest rate available, review your credit record and correct any outstanding debts or problems applying for a loan.

Always read the terms and conditions. Common car loan traps include a lump sum ‘balloon’ repayment at the end of the loan term and/or termination fees for paying off the loan early.

Source: Herald Sun

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