Unsecured car loan

There are many reasons why it might be time for a new vehicle and to therefore be shopping around for an unsecured car loan or cash loans online.  Perhaps you have just got your licence, are keen to assert your newly-gained independence and need a little car finance.  Perhaps your little family is about to get bigger, so you need a vehicle large enough to fit all the baby paraphernalia from car seats to prams.  Maybe you finally feel like it is time to treat yourself with that classic vintage car you have wanted all your life.  Whatever the reason you may be in the market for an unsecured car loan, Ozzie Loans can help you to get your car finance sorted easily and quickly.

What is an unsecured car loan?

So if you are thinking about car finance and are wondering what the difference between unsecured and secured loans is, let’s look into the details.  Basically, in the world of personal loans, a secured loan requires that you guarantee, or secure, the loan with an asset, such as your home or your car.  Money lenders require this security in case anything goes wrong, and you default on your repayments.  Being granted the rights to your asset means that the lender has the assurance that some of their money can be regained by selling off the asset to raise funds if the need arises. Generally speaking, for a secured car loan, the collateral is the car itself.  That means you can lose your car if you don’t repay the loan.

Unsecured loans, on the other hand, are types of loans where the loan is not secured with an asset. This is why they are generally for lower amounts, as they pose more of a risk to money lenders.  In order to gain access to this line of credit, an unsecured car loan may require a guarantor, which means that a family member will be able to step in to repay the loan if, for any reason, the borrower cannot.  The bottom line in regards to an unsecured car loan is that if something happens, your car won’t necessarily be taken away from you to use to pay back the loan.  Of course, that doesn’t mean you get away with the failure to repay as failing to repay an unsecured personal loan, or any other type of loan is serious business.  This is because when you borrow money,  you have a legal obligation to pay it back.  Your credit rating will be negatively affected if you don’t repay your loan, and the lender may take legal action against you.

One of the advantages of an unsecured car loan is that you are more likely to be able to buy a  second hand or vintage car with the money that you borrow.  This is because, with a secured car loan, the lender is more likely to have a say in what kind of car you can buy.  An older car may not have much value in terms of security for that kind of loan, so it won’t be of much use to them as a potential way to get back their funds.  So if you are looking for a cheaper or more retro vehicle, then an unsecured car loan might be the better choice.

However, it is important to keep in mind when considering loans of this type that the repayment period of unsecured loans will generally be shorter.  Also, with this type of loan, personal loan interest rates are probably going to be higher. That’s because money lenders are taking a risk by lending money unsecured, so these offer a counterbalance to the risk undertaken.  

So how do you get an unsecured car loan?  Because you are not offering an asset as collateral, then it’s going to depend a lot on your credit rating.  Based on your credit history, the lender can decide whether or not to lend you money.  It’s also important to ask yourself, ‘How much can I borrow?’ as it is not good practice to borrow more money than you are reasonably able to pay back, especially with regards to short term loans and credit cards. Crunching some numbers with a personal loan repayment calculator and considering your own income and budget should give you a good idea of a reasonable amount.

Life is always throwing up changes and challenges, and sometimes, we need a little fast cash to help us out.  Whether it’s an education loan or a student loan, a wedding loan or a travel loan, personal loans can help you to get things started.  Check out our online loans at Ozzie Loans to see how you can get easy finance with our same day loans for your dream now.