Most car loans are classified as unsecured loans, as they are not secured on property or another item. Car loans, as they are unsecured, are usually a bit more expensive than a loan like a mortgage. Although usually it’s best not to get a loan but to save up for your purchase, sometimes a car loan is the alternative for you
The actual biggest advantage to the borrower of a guaranteed loan is that secured loans usually are subject to a lower rate of interest – often just a couple percentage points more than the bank of England base rate. The advantage to the lender is that should the borrower default on payment or even cannot pay, they might institute court proceedings for the house or other protection to be sold and the profits of the purchase applied to paying off the debt. For this reason it is essential that anyone taking out a secured financial loan should be 100% certain that will have them able to meet the monthly payments.
It is plain to see that the big drawback with home owner secured loans is that your home, property or even assets that your loan is secured upon may be at risk if you default on payments. To make certain that there will be sufficient equity to pay off the debts, most mortgages are for under 100% of the value of the actual asset. It really is advisable to have payment protection insurance in place so that if you are unable to work through ill health or being made redundant, your payments are still going to be paid.
Lenders usually offer both secured and unsecured loans. The exact figures can differ but usually they will offer secured loans with regard to figures over £5, 000 as well as for periods over 5 many years. For this reason secured loans tend to be particularly suitable for larger expenses such as major household.
If you are getting a car loan then you should shop around for the best deal. Some loan companies offering peer to peer lending such as Ratesetter and Zopa will give you the best deals with the lowest interest rates.