You may wonder what homeownership has to do with car loans and why would lenders offer special deals on car loans for homeowners. Truth is that homeownership provides a lot of benefits when you apply for almost any kind of loan and car loans don’t happen to be the exception for this loan market’s rule.
Nevertheless, there are certain things that you need to understand when it comes to car loans and homeownership so you can decide which loan best suits your needs when you are looking for car financing. In any case, homeownership will contribute a lot to securing for you the best loan terms on the particular loan that you choose.
Dealership Financing
You may have heard a lot of advice against financing through dealerships. Truth is that loans provided by dealerships usually don’t come with very advantageous loan terms and thus end up being more expensive than other car loans provided by banks and financial institutions. This is due to the fact that dealerships are not specialized on loans and thus are only intermediaries adding additional costs to the loan process.
Now, you have another reason why you should not resort to dealership car loans when searching for financing to purchase a car. If you are a homeowner, you can’t take advantage of the benefits homeownership provides through loans that are granted by dealerships. This is due to the fact that car loans provided by dealerships are pre-defined and can’t be customized for the borrower.
Car Loans and Home Equity Loans
It is an excellent idea, if you have sufficient equity on your home, to request a home equity loan and use the money obtained to
finance a car purchase. This method of financing has many advantages and few drawbacks, the main one being the risk of repossession of the property that will trigger if you fail to repay the loan’s monthly payments.
But home equity loans provide an inexpensive source of funds for car purchases because the interest rates charged are lower than with car loans, the repayment programs are longer and thus the monthly payments are lower and you can also obtain higher loan amounts that due to your income you may have not been able to obtain through regular car loans.
However, the fact that you are a homeowner, even if you decide not to use your property as collateral and resort to regular car loans, can provide you with very advantageous terms because it greatly reduces the risk of lending to you. Thus, car loan lenders that are accustomed to dealing with all kind of applicant’s will take note of the fact that you are a homeowner and provide better loan terms because you represent a lower risk of default.
Compared to non-homeowners, you can get on your car loans, lower monthly payments, flexible repayment schedules, very competitive interest rates and higher loan amounts though not as high as the ones you can obtain with a home equity loan. Thus, consider all your alternatives along with your needs and don’t forget to mention the fact that you are a homeowner when requesting loan quotes. It can make a big difference.
