(PRLeap) Charlotte, NC (April 22, 2010):

When you don't have enough resources to pay cash for a vehicle, it is in your best interest to consider obtaining a . Car loans are typically secured by the car, as compared to unsecured loans for which there are no assets held in lieu of payments. In this particular instance the vehicle you are purchasing will be collateral for the loan. The loan that you get is based on the value of your vehicle at the time that you buy it. The loan value will almost certainly be 70% to 80% more of the retained price of the car. This is an essential pre-requisite to get auto loan.

The reason for this added values of the loan is due to the market value of the car that will certainly depreciate,after a few years when you drive away with the car. Make sure you know how much the value of your car will depreciate. Purchasers need to know this so that they do not end up in a upside down .

If the dollar amount of an auto loan does not match the actual value or worth of the vehicle, it is referred to as an upside down . You want to make sure you don't pay more than the value of the vehicle. One difficult situation a borrower can find himself in involves car insurance that covers only the book value of the car; this means in case of an accident, the borrower would have to use his own cash to cover the difference. You need to know all the parts that make up the terms so you don't end up in this situation.