Secured Auto Loans

Many auto loan borrowers have never heard of secured auto loans but they are becoming more and more popular since they can help you buy an automobile even if you have bad credit or no credit at all.

As their name implies, secured auto loans are approved when the borrower pledges some asset as collateral for the auto loan. Some borrowers pledge their home, land, boat, etc. but you can also use the vehicle you intend to buy (either new or used car) as collateral for the loan.

Using the car as collateral is done much in the same way as housing is used to secure a mortgage. However, the auto loan duration is considerably shorter, typically conformed to the useful life of the vehicle.

Usually, secured auto loans are provided at much lower interest rates than unsecured loans. Additionally, they often offer a very reasonable loan repayment schedule.

If you are putting your car as collateral, the loan amount will be determined based on its value. You should expect a smaller loan amount if the car is used. If your home is the security of the loan, then you can borrow a bigger loan amount on the back of equity in it

Yet, secured loans are not deprived of disadvantages. Their biggest disadvantage is that you run the risk of losing your valuable property if you miss your payments and default on your loan. This is the main reason why unsecured auto loans will probably always be more popular than secured auto loans.

However, for car buyers having trouble getting an auto loan because of the state of their credit secured auto loans may be the best (and sometimes the only) solution. Since the borrower's property cuts the risk for the lender substantially, secured car loans are usually easily approved for bad credit borrowers and come at a lower rate than other types of unsecured bad credit auto loans.

The auto loan calculators and the information available on this site are intended to serve only as general guidance regarding auto loans. Since they do not take into account your individual circumstances, we cannot and do no guarantee their accuracy or suitability to a specific purpose. We highly recommend you to consider the appropriateness of any information to your objectives before acting on it, and encourage you to consult a qualified professional regarding you particular personal situation.

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