Secured Personal Car Loans

When an individual purchases a car for their own personal use, a Secured Car Loan is the most popular and commonly used form of finance. The structure is straight forward and the format fairly standard across banks and lenders.

The lender extends the funds to purchase the vehicle and uses the car as security against the loan. If the borrower defaults on the loan, ie fails to pay the required repayments, the lender has the right to repossess the car.

Key Features of Secured Car Loan

  • Most banks and finance companies offer secured car loans.
  • Each lender will have their own guidelines for extending a loan.
  • Some lenders may have restrictions on what car types or what car price ranges they will finance with a loan.
  • The interest rate on a secured loan is usually fixed for the term of the loan.
  • By law lenders must display their current interest rate and a comparison rate when advertising consumer car loans.
  • The loan term is fixed, usually 2-5 years with the average being 4 years or 48 months.
  • The monthly repayments are fixed for the term of the loan.
  • Most lenders will set up a direct debit facility so the monies are automatically deducted from the borrower’s nominated account on the same date each month.
  • Additional payments are allowed. If you choose you can make extra payments to pay off your car loan earlier.
  • If you do finalise your loan before the loan term, minimal break fees apply. Break fees are charged by lenders when loans are paid out before the pre-agreed loan term.
  • Some lenders will require that purchasers pay a deposit, some will not require a deposit and 100% of the purchase price can be covered by the loan.
  • Most lenders will require the borrower to take out a comprehensive insurance policy on the car.

Sourcing a Secured Car Loan

  • Most banks and finance companies advertise personal car loans.
  • Many car dealers, those selling both new and used vehicles, advertise car finance and they are usually aligned with a particular finance company.
  • Individuals can apply directly to banks and finance companies for a car loan.
  • In order to get multiple quotes to compare which is the best offer, you will need to make application to multiple lenders. This process can impact negatively on your credit report as lenders are required to report all loan applications. Seeing multiple applications for the same loan may appear to other lenders that you are desperate.
  • To ensure you get the cheapest car loan available for your individual profile and requirements, you can engage the services of a finance broker. Brokers are available to both individuals and businesses and handle all the loan arrangements for you, sourcing quotes from the multiple lenders they are accredited with to find you the best offer.
  • Finance brokers can also assist you with the paperwork, REVS checks and other issues. Saving you time, hassle and ensuring you receive the best offer for your car loan.

We know people who operate in the finance broking area and we welcome your enquiry for further information or contact details to assist you.