Personal & Auto Loans

Need help understanding Personal & Auto Loans? Give us a call! 

Free ConsultationContact Us

Understanding Personal & Auto Loans

Understanding the terminology, principles, pros and cons of personal loans and auto loans are great skills to have when getting on top of your finances. Knowledge is power, especially in this area, so making a fully-informed decision is the key to optimizing your situation. Being able to weigh the positives and negatives of each type of loan will aid in deciding which loan to pay off first (and why), what type of loan to take out, and whether a loan is even needed.

What Is A Personal Loan 

A personal loan is an amount provided by a lender in exchange for a promise to repay – there is usually no property securing the loan (no collateral). In other words, the lender is taking the borrower’s word that they will repay the amount borrowed. The increased risk to the lender (due to the lack of security or collateral) means that personal loans normally carry high interest rates, shorter terms and lower total lending overall when compared to auto loans. Personal loans offer flexibility in that generally speaking, they can be used for anything – including travel, credit card bills or other unanticipated expenses.

PERSONAL & auto loans

How Do You Know Which Loans

To Pay Off First?

There are several general principles and approaches to deciding what loan to pay off first. One way is the ‘debt avalanche’ method, which involves paying the debt with the highest rate of interest first – this method is great for reducing the interest that you pay, but may not be the best for staying motivated and inspired. Another way is the ‘snowball method’, which involves paying off the debt with the smallest balance first, followed by paying off the debt with the next smallest balance and so on and so forth. As each debt is paid off, the payments that were being made to the smallest (now paid off) debt are added to the payments being made to the next smallest debt, resulting in a ‘snowball’ effect – in essence making larger payments and having fewer debts as time goes on. This method is great for seeing quick results in reducing the number of debts but may end up costing significantly more in interest over the long term. The best method is different for everyone, depending on a variety of factors and circumstances; there is no one-size-fits-all approach when it comes to financing.

What Is an Auto Loan

An auto loan is lending specifically related to a vehicle. Auto loans are normally split into categories such as new car loans, used car loans, loans for cars purchased from private parties, lease buy-out loans, and auto loan refinance etc. Each type of loan has a different rate of interest based on a different level of risk for the lender. Auto loans can be paid off over terms as long as 84 months, with interest rates generally being higher, the longer the term. The main characteristic of an auto loan is that the car is treated as collateral or security for the loan – in other words, if the borrower fails to keep up with the payments, the lender is permitted to sell the car and recover the amount they are owed (normally referred to as ‘repossession’).

GET HELP UNDERSTANDING MORTGAGE LOANS

 

Life Streamliner specializes in not only getting you out of debt, but teaching you how to get out of debt. Working with Life Streamliner will allow you to quickly and clearly understand the key concepts that make up personal loans and auto loans, the main differences between them, the pros and cons of each, and which one (if either) is right for you. Life Streamliner will also show you what approach to take when paying off personal and auto loans, and most importantly, why that approach is right for you and your individual circumstances.

PERSONAL & AUTO LOAN FAQ

ARE LOANS WORTH IT?

Life Streamliner specializes in not only getting you out of debt, but teaching you how to get out of debt. Working with Life Streamliner will allow you to quickly and clearly understand the key concepts that make up personal loans and auto loans, the main differences between them, the pros and cons of each, and which one (if either) is right for you. Life Streamliner will also show you what approach to take when paying off personal and auto loans, and most importantly, why that approach is right for you and your individual circumstances.

Already know what you need? Schedule your FREE consultation!