A guide to Loans
TAKING OUT A PERSONAL CAR LOAN
Buying a car is probably, after your house, the biggest single expense you will ever make. Few people, especially first time buys, have the financial means to pay for a car outright without the aid of a loan.
Car loans are generally unsecured loans, meaning that you put none of your possessions up as collateral, and are thus quite difficult to obtain. There are, however, secured car loans available too.
WHAT TYPE OF CAR LOANS ARE THERE?
As mentioned above, there are two types of car loan: secured and unsecured car loans.
Unsecured car loans are by far the most common with a wide variety of lenders offering deals. The loan process is usually completed very quickly and is usually the only option for those who do not own their own homes. These loans are made without you having to provide any of your possessions as collateral but be because of this the rates are usually much higher and the terms much shorter.
Secured car loans are ones in which you do offer up some form of collateral, usually your home. This makes it a very low interest loan with a much longer term. Some lenders will let you use the car itself as collateral. If you default on the payments your lender will repossess the car to cover their losses, but if you manage the payments well it will contribute towards your credit history.
Lenders will charge interest on any amount that you borrow. The interest rate will be displayed as the Annual Percentage Rate, (APR). The APR is set according to the size of the loan, your ability to pay it back, the type of loan and its term.
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