Auto loans are given as cash vouchers or as a drafts that can be used like a bank check to pay for the bill towards the car you are going to purchase from your auto loans lender. If you are getting a new or used car though a dealer, most dealers work towards getting you a loan approved from their chain of lenders!

There are two types of auto loans that are generally given:

Direct auto loans scheme:

Are loans that you get from your bank or financier to pay for the car that you are going to get from a dealer. You can use this loan to pay the money you owe to your dealer to get the car.

Indirect auto loans scheme:

Are loans that your dealer organizes for you from his chain of lenders. You sign up a loan to pay for your car in favor of your dealer. The difference here from the direct auto loans is that your dealer brings him to you rather than you search for one.

Most indirect auto loans are genuine however, it is far better you do your homework because chances are that your dealer may have internal claims from commission from the financier for closing a sale with you; and the financier may charge you indirectly for the same from your repayment! Hidden charges may be! So, better work out your auto own loans lender yourself.

There are other kinds of auto loans:

• Prime auto loans

• Special finance or subprime auto loans People with a very good credit rating do qualify for prime auto loans. Special finance auto loans or subprime auto loans are for people with adjustable bad credits and the interest rates are higher compared to prime auto loans because of the risk factor in lending to such clients.

However, in both the cases the lender will own the title until the whole loan amount is repaid. The APR for the auto loans is not always a predetermined standard for every person! The interest rate determined for each lender is dependent upon whether you fall under the prime or subprime category.

Apart from your credit rating score each lender may have a standard style to determine your credit score that fits their lending and collecting practice! The general prime auto loans rate fall somewhere between 9% to 10% and the subprime auto loans interest rate fall between 9% to 24% depending on the risk of lending involved.

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