A secured car loan is when you use the value of the vehicle as collateral in the event you default on a loan. These are the most common type of car loan on the market and are generally what most people would consider when looking for car finance.
Here at Loantec, we are specialists in everything finance, and that includes getting the best secured car loans for our clients. With more than 40 years of experience in finance, lending and problem solving, and a panel of more than 40 lenders across Australia, you can rest assured knowing we will get you the best deal possible.
To get started, fill in our simple pre-qualification form and one of our Finance Technicians will be in touch to discuss your secured car loan options.
Why a Secured Car Loan?
There are plenty of benefits for getting a secured car loan for your new vehicle. The biggest benefit is that they are generally the most affordable option available.
Because you are using the value of the car itself as security for the loan, most lenders are willing to give better rates and loan terms. And, if you have additional items to use as security against the loan, like another car or a motorbike, you can reduce your car loan repayments even more!
Secured car loans are also often quicker for lenders to process as the main factor they consider is the value of the car. Which is easily accessible from the dealer, especially if you are buying new. On the other hand, an unsecured loan will involve more stringent checks and will generally take longer to process and get approval.
Of course, if you are using additional items to act as security then your loan may take a bit longer as they may want to assess or ask for further documentation for those items.
Are There Any Downsides to a Secured Car Loan?
There are a few considerations you’ll need to make when considering between an unsecured and secured car loan. While secured loans offer the best rates, your loan will generally be limited to the value of the car. Meaning that you can’t borrow more than what the car is worth.
So, if you need additional funds to cover costs like insurance or registration, you will need to find another way to finance it. Some lenders also have a restriction around certain makes and models. And they may not be willing to offer finance for your chosen car.
Fixed or Variable Interest Rate?
Another great benefit of a secured car loan is the fact that most lenders will offer a choice between fixed and variable interest rates. Picking between them will come down to your financial situation and what is right for you, but there are pros and cons to each.
Fixed Rate
A fixed rate loan means that your interest rate will not change for a fixed period. Most lenders won’t offer a fixed rate for the entire term of the loan, and will usually limit it somewhere between 1-5 years.
The main benefit of a fixed rate loan is the security from fluctuating interest rates. Because your rate is fixed, you’ll know exactly what interest you’re paying and what your repayments are.
On the other hand, if the interest rate drops, you won’t be able to benefit from the lower rate to reduce your repayments. Fixed rate loans will also usually have additional early repayment fees or extra costs for refinancing.
Variable Rate
Opposite to a fixed rate loan, variable rate secured car loans use a fluctuating interest rate. This means that if the interest rises your repayments do as well, but if it drops down, so will your repayments.
Most lenders will use a variable rate loan as their standard product. As a result, they’ll offer more flexible loan terms most of the time. Unlike a fixed rate loan, there’s generally no additional fees and charges for making extra payments or paying off a variable rate loan early. However this can vary between lenders and products, so be sure to double check before paying off your loan in advance.
Applying for a Secured Car Loan with Loantec
When you need car finance at a great rate, think Loantec. Our experienced team will go through your situation to find the best secured car loan available.
In most cases, to understand your situation we’ll only need some basic information like:
- Drivers licence
- Employment
- Any existing debts
From there we’ll work with you to begin your application and process any paperwork.
And the best part is, you can do the entire process online! No printing paperwork or coming into a store, your entire finance process can be done from the comfort of your living room.
Ready to buy a new car and need finance? Then talk to the Finance Technicians here at Loantec today. Our precise pre-qualification system makes it simple to discover your factual finance options.