There are just so many different types of car financing tools around aren’t there? That’s why The Smarter Finance Company is taking the time to share with you how different loan types work! Today we are looking at the Secure Loan so that you can decide if this is the car financing tool for you to fund a new or used vehicle!
How it works
Taking a loan from a financial institution takes a great deal of trust – the lender puts up a great deal of money to the borrower with not much to go on besides the good faith that the money will be repaid over time, a very long time. There are quite a lot of things that can go wrong with repaying a loan. Perhaps the borrower loses his job and runs out of money to make payments or passes away, or worse, perhaps he just decides that he doesn’t want to pay anymore.
This is why the idea of a consumer car loans has come up. Using the car itself as a collateral for the finance provided to him, the borrower pledges that they will make payments or else the value of the car can be used as restitution for non-payment. This can work with any other asset put up as collateral too.
Because of the collateral that is your car, the lenders are much more willing to lend you a large sum of money. You will probably be able to get a larger amount as a loan as compared to a non-secured loan (or a loan without a pledged asset as collateral). At the same time, interest rates come down, tenures extend… Inhibitions are loosened all round!
Similarly with other loan types, there are waivers and tax deductions if you are purchasing a vehicle for your company and there are plenty of options to keep your contract flexible in terms of varying your monthly repayment amount and prepayment (deposit) or balloon payment (residual payment) amounts too.
As with all cases of defaulted loans, the lender has legal right and obligation to seek financial restitution for the loss of their money. With a secured loan, that means that whatever you’ve put up as a security or collateral is in danger of being repossessed too! The lender is fully within his right to take your car back or whatever else you’ve pledged and take that as payment since the rest of the instalments cannot be made. If you’re worried about losing your car in the case of missing out your payments, then this is not the loan you should opt for.
You shouldn’t be too worried about the cons of a secured loan if you have worked out your car financing before committing to a contract. The Smarter Finance Company specialises in helping its customers to analyse and look through different car finance deals so that you can apply and secure a loan for yourself that you are comfortable with. Call us or drop us an email today to make an appointment with our qualified consultants.