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If you are thinking of buying a car, you will need to consider the kind of financing that you will use to pay for the purchase. If you want to go the unsecured route, you can take out a personal loan. But if you would prefer the secured option, you can choose to take out a car loan instead.
As a secured loan, a car loan uses the vehicle you are purchasing as security, making it the loan collateral. This means that if in the future you are unable to pay your loan obligations, the lender has the legal right to seize the vehicle and sell it to recoup whatever money you owe them. Just like a mortgage loan, the lender will retain the ownership of the asset until such time as the full loan payments have been made. Generally, the loan is paid off through fixed monthly instalments.
Since lenders will retain the ownership of the car, you can expect that they will look at you as less of a financial risk. They have something that they can use as a way to recover their losses if you end up defaulting on them in the future. Not only do you get a lower rate, borrowing rates for car loans also tend to be fixed. So, you are cushioned against rate increases that some unsecured personal loans tend to be associated with.
For car loans, you are often given the choice to pay it off within 36,48, or 60 months. Like personal loans, how much interest you pay will ultimately be determined by the loan term you choose. If you wish to minimise your interest payments as much as you can, a shorter term is ideal. But if what you’re after is the convenience of easily affording the mostly payments that you need to cover, a longer term may work best for you.
Understanding Secured Loans and Unsecured Loans
When you take out a loan, there are generally two types for you to choose from: secured and unsecured. Each of these options has its own advantages and disadvantages. This is why before you decide to take out one, it makes sense that you first find out everything you can about these loan types to choose the option that works best for your financial need.
The best way to differentiate these two loan types is that one has no asset involved while the other is secured by collateral. Secured loans are usually protected by an equipment or asset. It could be a car or a house or in some cases, a jewellery piece. Since there is an asset protecting the borrowed amount, the rates for borrowing tend to be lower and more affordable. Lenders generally feel safer when there is security involved which is also why they’d be willing to grant secured loan borrowers a higher loan amount.
An unsecured loan, on the other hand, does not involve any asset or any form of security. It is not protected which is why it is considered a higher risk for the lenders. This is also the reason why most lenders tend to charge a much higher borrowing rate for these types of loans.
A personal loan is one of the most popular examples of an unsecured loan. Generally, lenders decide on whether to grant approval or not based on a borrower’s credit score as well as the amount of income that he is earning. However, while personal loans tend to be charged higher interest rates due to its unsecured nature, it remains a popular borrowing option among the public due to the flexibility in which it can be used.
Secured loans are often used by borrowers that want to get approved for a larger loan amount. Examples of secured loans include car loans or mortgages. The property or the vehicle is considered the loan collateral. However, this type of loan does carry the risk of the borrower losing the asset if he defaults on the loan payments.
Choosing The Right Loan
If you are having financial problems, considering a loan might be a good option. However, you need to carefully choose which loan you need before applying for it. Unsecured loans such as payday loans, credit cards, short-term, and other similar types can be great during emergencies. However, keep in mind that unsecured loans may have higher interest rates compared to secured business loans. It is highly recommended for emergency situations but should not be considered for long-term goals.
Ready To Get Started?
Select Your Loan Choose the loan that is suitable for your needs. We have plenty of loan options you can choose. Whether you’re planning to buy a new car or need a short cash to keep your day rolling. we have everything prepared for you.
Provide Your Information After you have selected a loan, visit the lender’s site and complete an online form. You need to provide your details for us to process your application. You will receive a notification once everything is already completed.
Get Your Funds Results are posted in just a few minutes. Once you are approved, the amount that you have requested will be deposited immediately and directly to your checking account. Automatically, the money will be posted and you can use it to pay for online or offline transactions.
Frequently Asked Questions
Got questions? We have answers!
How Fast Can I Get The Money?
You can have the funds in as fast as 15 minutes. All you have to do is to complete an online form and provide your information. Processing your application would take a few minutes or less. Once approved, the funds that you have requested will be deposited instantly to your account.
Do I Need A Guarantor?
If your credit is good, most lenders would be okay with you not providing a guarantor. Unsecured loans are extra risky for lenders due to the absence of collateral. With no other backing aside from the borrower’s creditworthiness, it would be reasonable for lenders to demand extra security. If you currently don’t have a credit history, it would be best to go for a guarantor loan.
What If I Miss My Payment?
There are times that this could happen. We understand that there are circumstances that prevents you from paying on time. If you are having difficulties paying off your loans, you can reach out to your lender to provide you with convenient options. Delayed or missed payments could set you back and cost you additional fees and charges.
What Happens If I Lie On My Application?
Even if you’re tempted to, don’t lie on your application. Once a lie is caught, the lender may void all your application and incur additional fees and penalties. Worse, if you have falsified your documents, you might end up locked in a cell for a very long time.
What Is A Payday Loan?
Payday loans are types of unsecured loans that are easily obtained. If you’re in need of immediate cash assistance, payday loans are your best friend. You can have the funds immediately on the same day of application. Repayment terms are also flexible. You can either have it tied on your next paycheck or pay it in advance.