For many people, owning a car and being able to move around on four wheels is essential, particularly if you are a student living far away from home. Thankfully, financial service providers are now able to offer car loans through online car finance for all types of customer.
The use and reasons for purchasing a car on finance are widespread, but the conditions can vary based on each provider. The most common way of purchasing a car through a loan is acquiring a secured loan.
A secured loan is not unique to cars – in fact, you can apply for one for many different reasons, such as buying a house, purchasing a car, or even redesigning an office. The loan is an agreement between two individuals (legal or individual entity), and states that one party will give out the loan in exchange for collateral.
In the case of car loans, the collateral is the car itself. It works like this; the bank gives you money to buy a car. You buy a car, which acts as collateral (security for the bank). You start paying back the loan in monthly instalments, until it is fully paid off.
If you act as an exemplary customer and pay off the debt on time, you will eventually cover the costs without any negative repercussions. However, if you are late in meeting your loan repayments, the bank is allowed to issue you with a fee. Likewise, in situations where you fail to pay back the loan, the bank is legally allowed to take the car away from you.
Why do people prefer secured car loans?
Of course, having your lovely new car taken away from you is not ideal. But, if you act honestly and budget correctly, paying back your loan as agreed, then this is unlikely to occur. Normally, people understand their responsibilities and prefer to use monthly car finance options to purchase a car, as opposed to buying a new vehicle outright, which often many students cannot afford.
There are several reasons as to why people choose to use a secured car loan:
- They are easily accessible.
Secured car loans are everywhere. No matter where you live, your local bank or online car finance provider is able to offer a secured car loan. Provided you have the right information available to make an application, your options are endless.
- The low interest rates.
High interest rates are for security purposes. With secured loans, the car already acts as a security, if you will, which is why this type of loan normally have lower interest rates.
- Flexible choice and loan terms.
When entering into any loan agreement, flexibility is an important factor, particularly when it comes to loan terms. If you do not like the terms a bank or provider is offering you, you can switch and try a new one. Secured car loans are normally open to customers changing their terms, which means you can choose your type of payment and adjust it to your salary payouts.
Moreover, you can use your secured car loan to buy a car, redesign the old one, add some extra power to it, and more. There are so many possibilities out there!