Secured car loans are a form of finance used exclusively to purchase a vehicle. It can be either a new or used car, however, that vehicle will be put up as collateral against the amount you borrow from the financier. Should you happen to fall behind on your loan repayments, the lender has the option to repossess the vehicle from you in order to mitigate their losses. The financier may even resell the car so that they may recoup some of their losses.
Why should I consider a secured car loan?
As secured car loans hold less risk for lenders, you may find that you are able to attain a secured loan with lower interest rates than if it were an unsecured car loan. This has the potential to help you save significant interest costs over the life of the loan.
In addition, it is also likely that you will be able to approach the financier for a higher loan value. This is because of the security you are putting up against what you are borrowing. This could make a difference in helping you step into a car that you actually want to own and that may hold its resell value better than another. So if vehicle choice is an important aspect of your decision making, then a secured car loan may just be a better option for you to consider.
A secured car loan also raises the prospect that you may be able to attain a loan with a longer term. For those who prefer to have flexibility in managing their cash flow, a longer term may help you organise your finances into a more manageable state. Who doesn’t prefer to avoid being under financial pressure? Just remember that there may be higher interest costs over the life of the loan.
What considerations should I take into account?
Before you decide to go ahead with a secured car loan, you will want to speak to an expert about what to expect. These are some of the key considerations you should take into account:
- Are there any fees involved to apply for the secured car loan?
- What will the interest rate and term of the loan be?
- Is that interest rate fixed or variable?
- How long is the offer of finance valid for if pre-approved?
- How do I make repayments towards the loan?
- Is it possible to make extra repayments without being penalised?
- Can I pay off the loan early without being penalised?
- Can I do anything to improve the terms offered to me as part of the loan?
- Can one financier match the terms proposed by another?
The Fincar team is here to help you with all your financing needs. Contact us today to help arrange your next car or equipment loan.