Different Car Loans in Australia
Different Car Loans in Australia
Ever wondered what the difference is between secured car loans and personal unsecured car loans and how that difference affects your finance and the car loan payments. Basically the difference is small in terms of the car loan details themselves, but is bigger when the true cost of each is taken into account.
Understanding secured and unsecured car loans in detail can be useful in saving money but, let’s first have a look at the a range of workings that determine the cost of your loan and of your monthly repayments. The cost of the car finance package is the total you repay less the amount borrowed. Hence, let’s say you are repaying ,000 at 12% interest rate over 36 months; you will repay at the rate of 4.29 per month. That would total a repayment of ,914.44, and the cost of the loan would be ,914.44 plus any set-up or administration fees. A finance calculator will enable you to work this out for yourself.
An another to a car loans would be car hire purchase (HP), where you hire the car over the repayment period and get the title to the vehicle with your final payment. Until then the car belongs to the HP company.
However, most finances are either secured or unsecured, and not all finance companies offer unsecured or personal loans so let’s look at secured car finance first. A secured car loan is one whereby the lender offers the loan with the car as security. If you fail to make payments, the lender can sell the car to recoup their money. It is possible to get a secured car loan on older motor vehicles, often 7 years, but the car finance term or loan term may be requested to be shorter than the standard 5 yearsor not at all by using your home or some other form of security. These however are not strictly classed as a car loan. normally the car is used as security over the loan.
If you prefer you can request no deposit car finance and have all on-road costs added to the amount financed. Options like registration , insurance to protect you against disability,death or unemploymentand comprehensive auto insurance as part of the financing deal. Loan protection insurance makes sure that the loan is paid off in the event of your death during the loan period, and car insuranceis needed to make sure that the car is in good condition should it be needed to repay the finance in the event of you defaulting on your payments.
This might all sound like doom and gloom, but these are conditions you see with most secured car loans,
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