Secured Car Finance or Personal Loan
interest rate will be lower than that for an unsecured car loan where the finance company charges extra to compensate for their added risk. As with any loan, a deposit will result in lower payments, or a shorter term, whichever you prefer.
You could also apply a balloon, which is an amount borrowed where you pay interest only and finalised the principle when finalising the loan. This is popular by those whose income will increase over the period, and they will be in a better financial position to pay a lump sum in 3 – 5 years time. This too results in either a cheaper repayment per monthor a shorter repayment term.
If you are buying a used motor vehicle, your loan will be priced differently according to the car finance company and the age of your car. Many will charge higher loan rates, and the current credit crisis has changed the outlook of many lenders to unsecured car finance in particular. Many no longer offer unsecured car finance due to the increased risk in the current economic climate.
However, they are still available, and some online brokers can assist in getting you a good low rate unsecured car loan. In addition to the interest rate on such loans, you should also evaluate the fees charged, since they can involve a considerable outlay for you before you get the loan.
The key differences between secured and unsecured car loans, therefore, can be summed up as:
Secured car loans are more affordable to repay, with generally lower interest rates.
You need to have full comprehensive car insurance with all secured car loans, while unsecured loans do not.
Both loans could require life insurance cover for the finance, but secured car loans are more likely to.
You can sometimes include comprehensive insurance, registration and other costs in the secured loan, but with an unsecured car financing you must include the the costs on top of the amount borrowed.
Fees for unsecured car loans can be greatly higher than for secured car loans.
Not all lenders will offer unsecured auto loans.
There few doubts that if your car is young enough to be given a loan with the car as colateral, then that should be your option. You might be able to arrange a secured loan for an older vehicle with your dwelling as security, but you will have to make sure to maintain the payments since lenders are becoming unsympathetic in the current economic down turn.
Car Loan Calculator is a website in Australia providing car finance information online. Use their car loan calculator to get car loan rates and finance repayments.
Article from articlesbase.com
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