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Dec 13

Your complete guide to secured loans, such as a loan against car and more

Posted by:AutoMoney

Unfortunately the need to borrow money is something a lot of people experience, especially in the current day and age. Times are tough and an unexpected expense can easily leave individuals in a sticky situation. For those who don’t have family members and alike in a position to help them out, the only other option is to turn to a loan. Nevertheless, with the wealth of different loans available it can be extremely confusing to know which one to go for. What’s a payday loan? Should I borrow from my bank? What’s a secured loan? The questions seem to be endless and this article is here to clarify any confusion regarding the latter; a secured loan. Thus, keep on reading to find out more…

The reason why secured loans tend to cause a little bit of confusion is because there are several different types. For example, you may have heard of a loan secured against your home or a loan against car. In essence, a secured loan is simply one that is taken out against something you already own. You give the lender the rights to the subject of the loan should you be unable to meet the repayments. This is the lender’s security. They know that if you cannot repay the loan they will be able to get their money by selling the car or the property in question. This is why it is calledsecured. The lender will then only give you the opportunity to borrow up to a certain percentage of the subject’s worth. This is usually around 70 per cent – nevertheless this is dependent on what the loan is secured against and what company you have borrowed the money from.

A log book loan, otherwise known as a loan against car, is undoubtedly one of the most popular types of secured loans and thus is worthy of further elaboration. With this type of loan you will have to give your vehicle’s log book to the lender until you have paid back the loan in its entirety. Your log book will then of course be returned. A lot of people opt for this type of loan because it gives them the opportunity to borrow a decent amount of money and the repayment terms can often be favourable too as you tend to have a good length of time to pay the money back. Furthermore, it doesn’t affect them in relation to the use of their vehicle. The only way your car will become out of bounds is if you fail to meet the repayment terms you have agreed upon.

On a final note, it is crucial to recognise some of the main benefits associated with going for a secured loan. In most instances you will find that this type of loan is much cheaper than an unsecured loan in relation to interest rates. This is because unsecured loans represent greater risk and thus lenders tend to charge a higher rate of interest. Of course you can argue that the risk is greater for you because you have the potential to lose your car or your home. However, if you borrow responsibly and do not take money that you cannot afford to pay back you should be fine. You will typically be required to prove you can afford the repayments anyway.

Summary – There are so many different types of loans available in the modern day. This can make it confusing for anyone looking to borrow money. This article aims to clarify what a secured loan, such as a loan against car, is.

Borrow with confidence

Borrow with confidence

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350.5%APR Representative
Representative example: Loan amount £1000. Duration 18 months. Repayable by 16 monthly repayments of £170.42 and one of £198.42 (includes Bill of Sale registration fee of £28) commencing two months from the date of the loan. Total amount repayable £2925.14. Rate of interest 187% per annum fixed. Representative 350.5%APR. LOANS ARE SECURED ON YOUR CAR. The vehicle may be repossessed if you do not keep up the repayments.