Is guarantor car loan a good option?

Many people nowadays seek guarantor car loans. But you should read all the plus points and the negatives of getting a guarantor car loan before you sign the loan paper (https://www.policygenius.com/loans/how-do-car-loans-work). Here is some basic level information on the guarantor car loans.

What Is It?

What is a guarantor car loan in the first place? Well, as the name suggests, a guarantor car loan includes a guarantor, that wows to repay the loan if the person getting the loans defaults or fails to repay on time.

Who Can Benefit From It?

Pretty much everyone can apply for a guarantor car loan, but it is considered one of the best options for students, younger people with no credit history and the people with a bad credit score. The guarantor is required to have a great credit history, he/ she may also be asked to attach security like their own car or home equity with the loan.

Guarantor loan usually has a lower interest rate than other types of car loans, so, it is preferable for most of the people looking to get a good deal.

Where Can I Get This Loan?

Many lenders across the country are willing to give guarantor car loans because these are more secured and easy to get back. Select a person that is willing to be your guarantor and check with various lenders to see if their requirements are met. You’ll surely the car loan sooner or later with this method.

Some banks are also giving guarantor car loans to their account holders. But they’ll usually have higher interest rates and more strict loan policies than many of the lenders out there.

Here are some of the basic pros and cons of getting a car loan through a dealer.

Advantages/ Pros:

One main benefit of getting your car loan through a dealer is that you don’t have to wait for much longer to get your loan application processed. You can just walk directly into a dealership, get your car and come home happy.

Another advantage that you might get by getting the car loan through some dealers is that they might add some special discounts for you. You might be given the option to pay 0% interest rate on the first few monthly repayments. This will allow you to settle down with your finances until the real interest rate starts.

But beware! There is always some type of a catch in such offers. For example, the dealer might ask for a higher price to process the application fast or ask for big balloon payments at certain points during the repayment period. This way, you’ll surely end up paying a much higher price than a bank or a lender would ever cost. They’ll use some twist of the numbers to make the deal look great on the paper.

Disadvantages/ Cons:

One big disadvantage of getting the loan through a dealer is that the interest rate would usually be higher than a lender or a bank. The main reason for a higher price is that the dealer adds his margin in the total price of the car.

Another con of getting the car loan from a dealer is that the dealer would usually have very strict deadlines for the repayments. So, you are requested to access your options and choose the best one while getting a car loan.

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