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9. Vehicle Loan

 
Concept

A car loan is secured against the vehicle you intend to purchase, which means the vehicle serves as collateral for the loan. If you default on your repayments, the lender can seize the auto. The loan is paid off in fixed installments throughout the loan. Much like a mortgage, the lender retains ownership over the asset until you make the final payment.

 
Types of Vehicle Loan

  • New Car Loan
  • Used Car Loan
  • Loan against Car
  • Commercial Vehicle Loan
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Advantages

  • Usually a lower interest rate
  • Easier to obtain with mediocre credit history
  • Often a convenient "on the spot" finance solution
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Disadvantages

  • You don’t have title to the car until the final repayment is made
  • An upfront deposit is generally required to secure the loan