Are Secured Car Loans Easier To Get?
Millions of cars are driven in Australia every day. We drive our cars to work, to school, on holidays, and to see friends and family.
Although there are thought to be close to 20 million vehicles on the roads in Australia, few people actually have the cash available to purchase a car outright. A car loan is often used as a type of personal loan, which enables the buyer to pay the vehicle off in monthly instalments rather than all at once.
Having a bit of background knowledge about the different types of car loans and how they each work can really help you understand the market and figure out which option is best for you.
The big difference between secured car loans and unsecured car loans
One of the most important differences between car loan options is whether they are secured or unsecured. Generally, secured car loans are easier to get. Here’s a little explanation of each:
Secured car loans
With a secured car loan, the car will be the security for the loan.
This means that if you do not repay your loan, your lender will be able to sell the car (the secured asset) to recover the proceeds against the amount that you have borrowed.
If the sale of the car doesn't cover the amount still owed on the car, you will owe the remainder (the shortfall).
Unsecured car loans
An unsecured car loan is a loan that does not require the borrower to provide a security item to the lender.
So, are secured car loans easier to get?
The simple answer is yes.
Although the type of loan you will get approval for depends on a variety of factors, including your credit history. Generally, secured car loans are easier to get than unsecured car loans.
Have a look at some of the advantages of secured car loans:
- Generally available for larger amounts than unsecured loans
- People with a poor credit history can still be approved for a secured car loan
- Repayments are generally fixed which allows you to budget accordingly
- Repayment periods are often longer
It is important to remember that although secured car loans are easier to get, you’ll need to make sure that you always keep up with your repayments as you could risk losing your car if not.
What about unsecured car loans?
For some people, unsecured car loans could provide the answer. They generally offer slightly more flexibility in terms of repayment options. However, the amount of people who can get an unsecured car loan is relatively limited.
Those with a poor credit score are often unable to get unsecured car loans as the lender will not risk losing the loan to someone who is unable to offer any security to them.
Due to an unsecured car loan proving far more risky for the lender, this type of loan will generally have much higher rates of interest.
What do you need to get a secured car loan?
Each lender will vary slightly in their requirements for providing a secured car loan, however. Here are some of the things you may be expected to provide:
- Proof of income
- Proof of employment
- Proof of residency
If the lender requests further collateral (in addition to the car itself), you must be able to show proof of ownership. But this generally won’t be the case. If you’re unsure of whether what you are being asked to provide is appropriate, always seek expert advice.
How do you apply for a secured car loan?
At Positive Lending Solutions, we have decades of experience in dealing with secured car loans. Speak to us to discuss your needs and get car loan advice to find the very best options available to you.
We’ll help you through the process and ensure you aren't left confused by the small print or at risk of signing anything that isn't right for you.
How to prepare for your secured car loan
Getting your secured car loan means getting your car. It’s great news, and you can look forward to many miles ahead on the road. However, it’s always best to be prepared to ensure that you make your secured car loan work for you.
- Make sure you’re aware of the interest rate on your secured car loan
- Always ensure your repayments are budgeted into your monthly spending to avoid missing payments resulting in potential fees.
- Be aware of any fees relating to issues such as early repayment
Getting a secured car loan can be the start of a great journey for you and your family. At Positive Lending Solutions, we want to help you find the best option for your needs so get in touch with us today on 1300 722 210.