An auto loan is a common program that implies a car title. In this case, you take money from the bank to buy a new car, which also acts as a title.
A loan secured by the auto
This is the most common program, which implies a secure of the car. In this case, you take money from the microfinancial organization. The auto is estimated by the manager. The funds are transferred to your banking account. When the loan is paid back, your title will be returned.
Loan secured by auto title
A car can act as a guarantee even if you take a loan for any other purpose. Cash loans, consumer programs, and other banking services may include the secure of a car as a cost-effective product. In this case, you can count on lower interest. As with a car loan, in this case, you can continue to use your car, but the lender needs to give one set of keys, and title.
Car loan without collateral
But at the moment, more ads are released that offer to issue a car loan without a title collateral. They say that the car owner remains in the right to dispose of his property, as if he had purchased a car for cash. At first glance, the proposal looks tempting, because when buying a car on credit, the borrower usually encounters some problems: the inability to issue a power of attorney, to enter the second driver in the insurance policy.
Having a car loan without such a guarantee, you seem to be solving these problems, but there are some nuances. Since the bank seeks to reduce possible risks when issuing a loan, most likely the annual rate will be higher than with a simple loan, and there may also be restrictions on the loan amount. In order to minimize additional costs when applying for a car loan, you need to perform a number of additional actions that confirm your financial viability.
But the most important thing when applying for a car loan without a title collateral is that the fact that you have a title in your hands does not mean that the car is not a loan collateral. In any case, a motor vehicle will be a guarantee until the loan is fully repaid.