Ever wondered what the difference is between secured car loans and personal unsecured car loans and how that difference affects your finance and their repayments. The car loans terms can be only minor, but is larger when the true cost of each is taken into account.
Before discussing secured and unsecured car loans in more detail, let’s first have a look at the various workings that determine the cost of your loan and of your monthly repayments. The cost of the car finance package is the total you repay less the loan amount borrowed. Hence, let’s say you are repaying $20,000 at 12% interest rate over 36 months; you will repay 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. A car finance calculator will enable you to work this out for yourself.
An substitute to a car finance would be car hire purchase (HP), where you hire the car over the repayment period and get the title to the motor car with your final payment. Until then the car belongs to the HP company.
However, most finances are either secured or unsecured, and not all finance companies offer unsecured or personal loans so let’s look at secured car finance first. 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 sell the car to recoup their money. It is possible to get a secured car loan when the motor vehicle gets past a certain age, often 7 years, but the car finance term or loan term may be requested to be shorter than the standard 5 yearsor not at all by using your home or some other form of security. These however are not strictly classed as a car loan. normally the car is used as security over the loan.
If you prefer you can request no deposit car finance and have all on-road costs added to the amount financed. Options like registration , loan protection insurance for disability,death or unemploymentand comprehensive auto insurance as part of the financing deal. Loan insurance makes sure that the loan is paid off in the event of your death during the loan period, and comprehensive car insurance is needed to make sure that the car is in good condition should it be needed to repay the finance in the event of you having your car repossessed.
This might look hard , but these are standard conditions for any secured loan, not only car loans. Secured car loans terms are from 1-7years, and the interest rate will be lower than that for an unsecured car finance where the financier charges extra to compensate for their added risk. As with any loan, a deposit will result in lower payments, or a shorter term, whichever you prefer.
Balloon payments could be an option on your finance package, which is like a deposit in reverse, payable at the end of the period. This is popular by those whose income will increase over the period, and they will be in a better financial position to pay a lump sum in 3 – 5 years time. This too results in either a lower monthly repayment or a shorter repayment term.
If you are buying a used motor vehicle, your car loans intererst rates can be priced very differentlyaccording to the finance company and the age of your car. Many will charge higher loan rates, and the current credit crisis has changed the outlook of many lenders to unsecured car loans in particular. Many no longer offer unsecured car finance due to the increased risk in the current economic climate.
However, they are still available, and some car loan brokers can ensure you get the best unsecured car loan available. In addition to the interest rate on such loans, you should also evaluate the fees charged, since they can involve a considerable outlay for you before you get the loan.
The key differences between secured and unsecured car finance, therefore, can be summed up as:
Secured car finance are cheaper to repay, with normally lower rates.
You need to have full comprehensive car insurance with all secured car loans, while unsecured financing does not.
Both loans could require deathinsurance cover for the finance, but secured car finance packages are more likely to.
You can sometimes include comprehensive insurance, registration and other costs in the secured loan, but with an unsecured car loan you must include the the costs on top of the amount borrowed.
Fees for unsecured car loans can be significantly higher than for secured car loans.
Not all finance companies will offer unsecured auto loans.
There few doubts that if your vehicle is young enough to be given a loan with the car as colateral, then that should be your option. You might be able to arrange a secured loan for an older vehicle with your residential home as security, but you will have to make sure to maintain the payments since lenders are becoming unsympathetic in the current economic crissis.
Watch the video related
This week Max Keiser and co-host Stacy Herbert look at an application for worshiping Ronald Reagan and growing fears of the next sovereign debt crisis. Keiser also speaks to economist Steve Keen about wages, deflation and zombie capitalism.
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#1 by WPMixer on January 16th, 2010
haha..
2:30 “to calculate beta you need this big computer..”
haha
beta= ratio of st. dev on your stock under consideration to st dev of major index (proxy for mkt) times coeff. corr between rates of return on your stock relative to rates of retrun on your market proxy say: S&P 500 , or better NYSE (2000 stocks)
anyway
or just Cov bet stok and mrk, diveded by variance of mkt
simple as that .. no computers no nothing, hahaha
though it’s a cool video
really funny one
thank you
r.
#2 by Wordpress on January 16th, 2010
at 0:28 it is written you can..but it shoul be:
At a certain point you CAN’T diversify your portfolio’s risk away.
#3 by Sean S on January 16th, 2010
Unsecured loans have higher interest rates than secured loans. The higher payment from the unsecured loan will increase the debt to income ratio and possibly result in a higher interest rate.
#4 by Adelaide J on January 16th, 2010
You have got to be crazy to borrow money to buy a car.
a car only depreciates in value. Plus the amount of interest you pay you will never have any money.
But if you must.
I would look at your contracts very closely, a bank is always the better way to go. At 10% from a car delaler, what's the catch. and the deal from the bank does not seem all that good either.
#5 by Free Blog on January 17th, 2010
nice
#6 by Juliaysha247 on January 17th, 2010
there are a couple of ways you could start building credit, you could get a small personal loan which you might need a cosigner or the best way will be getting a credit cards, you could get a credit card and use it for your every day expenses but make sure you pay in full at the end of the month that way it will show pay in full everytime the credit card company reports to the credit beuros. At the begining you will only be approved for the lower end credit cards but once you build credit in about 6-9 months you should be able to apply for a better card with better benefits such as free miles or cash back. Check out http://www.fastcardapprovals.com or fastcreditcardapprovals.com and go under bad credit section and you will find a few choices. Unless you are a student then apply for a student credit card this cards have no annual fee and lower rates.
http://www.fastcardapprovals.com/Bad-Cre...
http://fastcreditcardapprovals.com/
#7 by mysteryman on January 17th, 2010
1 Mortgage debt
2 Collateral
3 Depreciation
4 False
5 Repossess the car
6 All of the options
7 Vague question
8 True
9 All options
10 True if purchased during warranty period
#8 by Darek on January 17th, 2010
Auto finance is what I do for a living and you should be fine with 3-years in the bureau, 3-trade lines with one being a mortgage which will be paid over 12-times when you apply your most likely looking at a rate of 5.5%.
#9 by Anonymous on January 18th, 2010
its help
#10 by WPBlog Shop on January 18th, 2010
Thanks
#11 by Blogger on January 18th, 2010
very simple but effective
#12 by Robert B on January 18th, 2010
Robert you are making a statement here not asking a question. Reread what you posted and add to it what you are trying to ask if you have a question.
#13 by Dennis L on January 18th, 2010
Now from someone that's been through exactly what you described.
My chapter 7 discharged in March of 2001 I had reaffirmed on a existing loan with Ford so I already had the installment, I got 2 credit cards 1 from Orchard Bank and 1 from First Premier and used them for every day things and paid them off in full before the due dates.
After 12-months I bought a new car with no money down at 3.9% through Ford and got better credit cards.
After another 12-months I bought a new home again with no money down and a 6.5% fixed rate.
Now all of my scores are well over 800 because of all of these open and paid as agreed accounts after my discharge.
As long as you can pay your credit cards off in full every month and not go back into debt I think you have a great plan.
Good luck.
#14 by Gsdfg G on January 18th, 2010
Scam. The name should have given this away.
#15 by curt G on January 19th, 2010
You are entitled to surrender property in Ch 13. I'm pretty sure the bankruptcy attorneys for whom I worked would have advised you to surrender the vehicle when you filed you Ch 13. That is the simplest way to "get your name off the title" and relieve you of the debt.
When a vehicle is surrendered in Ch 13, any deficiency (the difference between what you owe on it and what they are able to sell it for) is discharged when you receive your Ch 13 discharge.
BTW, if you have an attorney, you should be asking your attorney these questions. If you don't have an attorney, you should.