Australians seeking finance for their vehicles have options for different types of car loans. Most people will generally seek the option of a secured loan as it offers a lower rate and faster approval. Then there’s the option of an unsecured loan, which offers alternative benefits to car owners. With pro’s and con’s for both, let’s consider what the major differences are between a secured loan and an unsecured loan:
Secured loans are the most favoured loans both for financial institutions and lenders, as well as those car owners securing the loan, as it provides benefits for both parties. For lenders, the benefit is that they have security in the asset of the purchase. If a person fails to adhere to the terms set out by the lender, which is usually a regular instalment, the lender will then have the right to repossess the asset without any protracted legal action in order to recover any monies lost. The positive for clients is that many Australian lenders offer a lower interest rate for this type of loan and you’re more likely to get a faster approval.
An unsecured loan takes away the obligation to surrender your asset in the event of a missed payment. It doesn’t mean that you can regularly skip on your payment instalments. What it does do is give you the surety that no matter what happens, you will still be able to hold on to your car until a settlement arrangement can be made that is suitable to the lender, usually conducted through a moderator or ombudsman.
Which Is Best For You
It purely depends on your financial needs. More clients tend to go for the secured loan and take advantage of the lower rate and fast approval. The key here is that you need to ensure that you pay the instalments on time, or the lender has the right to repossess your vehicle. Should this option not be the most viable for you, then you should enquire whether an unsecured loan would benefit your financial situation.
Best advice: Speak to our car finance specialists today by calling 1300 115 263 or get more information about our vehicle finance options.
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