Car Finance Services For Kitchener Residents
Car financing comprises of various loans that enables someone to acquire the vehicle they desire throughout the course of the payment period. Whether you have an outstanding credit score or a score that is not as impeccable, there is always an option that is suitable within the spectrum. However, maintaining a positive credit score plays a pivotal role in applying for a larger loan. Below are some of the common car loans that all car buyers encounter.
Secured vs Unsecured Loans
Depending on your circumstances, a loan can either be secured or unsecured. Typically, secured loans require a collateral. A collateral is when you use something that is something of value such as a house, car, or anything in between. When you agree on the loan, the lender can repossess the collateral if the practice of delinquent payments occur. On the other hand, with unsecured loans, you do not require a collateral. Typically, an unsecured loan involves a fixed payment and a fixed interest rate. Because you do not require a collateral for an unsecured loan, there is a promise of faster approvals. However, lenders are more of risk which affect your interest rate. One of the common examples of unsecured loans are personal and student loans. With both of these at hand, they offer their own unique advantages that can cater to a particular financial predicament. Therefore, it is crucial to distinguish between the two so you will get a better insight on what you are about to delve into.
Pre-computed interest vs Simple Interest
With both precomputed and simple interest loans, they both share a common goal of calculating interest. The simple interest method utilizes the actual balance outstanding on the payment due date. With simple interest, it does not increase loan balance. Therefore, if you miss a car loan payment, additional interest will not be calculated on a higher balance. Whereas, a precomputed interest is calculated based on principal balance. While your monthly payments could be lower, you cannot pay the loan off early since the loan is already implemented to the loan amount.