Personal Car Loans | Car Finance
Not sure of the difference between secured and personal car loans?
How that difference affects your car finance repayments?
Information on secured and unsecured car loans in more detail. First have a look at the various components that determine the cost of your loan and of your monthly repayments. The cost of a loan is the total you repay less the amount borrowed. So say you are repaying $20,000 at 12% interest rate over 36 months; you will pay back at the rate of $664.29 per month. That would total a repayment of $23,914.44 , and the cost of the loan would be $3,914.44 plus any set-up or administration fees.
Car loan calculator can assist with these calculations.
Differences in Secured and Personal Car Loans
Most loans are either secured or unsecured, and not all lenders offer unsecured car loans or personal loans.
Secured Loans: . Secured car loans is one whereby the lender offers the loan with the car as security. If you fail to make payments, the lender can repossess and sell the car to recoup their money. The finance company can limit the age of the vehicle security. Some automobiles can be not acceptable, for example used japanese imports.
You can normally have a secured car loan over one to seven years , and the interest rate normally will be lower than that for an unsecured car loan where the lender charges extra to compensate for their added risk. As with any loan, a deposit will result in lower payments.
The major differences between secured and unsecured car loans
- Secured loans are cheaper to repay, with generally lower interest rates.
- Secured loans demand fully comprehensive car insurance, while unsecured loans do not.
- You can sometimes include insurance, registration and other costs in the secured loan, while always in the total amount borrowed on personal loans.
- Fees for unsecured or personal auto loans can be considerably higher than for secured loans. Not all lenders will offer unsecured or personal car loans.
Secured Car Finance
Secured car finance can include on-road and additional loan and vehicle costs. For example:
- Registration costs, taxes and transfer fees.
- Loan insurance for unemployment, disability, or life cover,
- Shortfall or gap insurance cover.
- Comprehensive car insurance for the first year.
- Car accessories,
- Negative equity from a replacement commitment on the car you are trading.
Consumer Loan Insurance
In the event of disability where you cannot work, loosing you job, or your death during the car finance period, consumer loan insurance can be included in the finance package with most bank and car finance lenders. If you require loan protection ask when applying for your car loan. A financier cannot request you have this as a condition of the finance approval, nor insist on a particular insurance company premium and cover.
Balloon Payments
You could also apply a car loans with balloon payments, which is like a deposit in reverse, payable at the end of the period. You still pay interest on a balloon but only pay the principle at the end of the term. This results in either a lower monthly repayment if compared over the same term. It also means you can pay more interest.
Used Car Loan Rates
If you are buying a used car, your used car loan rates may be priced differently according to the lender and the age of your car. Many will charge higher car finance interest rates
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