That is pretty much the only downside to obtaining a secured loan as offering a vehicle as security usually results in a lower interest rate on the loan, which means more savings for you.
Lower interest rates mean lower repayments. You can afford to borrow more, or you can use your savings to invest in the little things that make your car more enjoyable. It’s your money and your choice.
A secured car loan is the most common type of secured personal loan, while a secured home loan is the most common type of home loan.
But not securing your loan does not alleviate your responsibilities. With an unsecured car loan, you are still responsible to the lender for the repayments and the loan
If you default on your loan obligations, the lender has options. A default usually results in a black mark on your credit rating, which makes it difficult to borrow in the future. And they can pursue you for the debt.
Unlike the purchase of a property, which remains in the same spot, a car is mobile which makes it harder to locate if repayments are not met. This is reflected in interest rates.
The bottom line is that a secured car loan is typically cheaper because of the tangible asset (the car) that the lender can repossess if the loan obligations are not met.
So make sure that you check the loan obligations and fulfil them to the letter.
The final choice of loan depends on your personal circumstances. It is important to do your homework, and perhaps seek independent advice.
All in all a secured loan offers you a lower interest rate, a longer loan term (if required) and an option to borrow more money, depending on your financial situation.
Ring loans.com.au and speak to the customer care team to enquire about a secured car loan.
Tags: car loan answers