Basically, an auto loan is divided into two types: Personal and commercial.

Personal auto loan scheme: This refers to a loan availed for a vehicle to be used for one’s own conveyance. While availing personal auto loan one should decide about, which type of vehicle one requires and whether one would be able to pay the installments of this particular loan and on. After deciding on it one needs to check various prices of different models and brands and then approach the lender with all the quotations, which in turn will help the lender in deciding the term of the loan, the interest rate etc.

The borrower must primarily check his repaying capacity while deciding on an auto loan. He must also consider the fact that until the auto loan is paid back along with the calculated interest the ownership will rest with the lender. So, he must be prompt in paying installments as and when it is due.

Commercial auto loans scheme: Most of the banks offer auto loans for such vehicles which can be used commercially by borrowers. Some lenders specialize in this field as it offers guaranteed payment of installments cutting the risk of non-repayment in case the vehicle meets with an accident as the buyer will definitely should insure it.

However, as the vehicle will be generating income for the borrower most of them pay the installments promptly. The borrower must decide on the type of commercial vehicle and its durability and its resale value. Since, constant rough and tough use makes vehicles of no resale value. The borrower also must pay installments in time as the ownership rests with the lender until the loan along with interest is paid off.

To summarize, it can be said that auto loan can be availed by anyone for personal or commercial purpose. Auto loans are available for primary and second hand vehicles. The interest rate in this case depends on the duration of the loan and the worthiness of the vehicle in the long run.

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