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Is a car loan the same as a mortgage?
I've read that car loans are a lot like a mortgage. Are they the same except for the collateral? What are some differences and similarities?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Car loans
are similar to mortgages in a few ways, but the collateral is different (car vs. home). The main similarities between the two are that both are:- Installment loans
- Types of secured loan
- Have a fixed payment period
- Have both prequalification and pre-approval options to help with budgeting
- Both are simple interest loans
Conversely, mortgages are far more difficult to get compared to auto loans, require more time, and also require more paperwork. This makes sense, as a home is a far more expensive asset and represents more risk to a lender than a car loan. In either case, shopping around for the best rate is essential to saving money and finding the best deal.
Both a mortgage and a car loan require insurance. If you want to benefit from cheaper insurance rates with bundling, make sure to hop on the
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