Which type of car loan is best? Secured vs unsecured
Found the car of your dreams, and can’t wait to get behind the wheel? If you’re looking for finance pronto, then it’s helpful to know your options. Here, we delve into the two main types of loans – secured and unsecured.
Knowing your options: secured vs unsecured loans
When looking to finance a car there are different options to consider. A secured loan uses an asset as a guarantee against the money you borrow, minimising the risk for a lender.
When you get a car loan, the asset is usually the car you’re buying. The car works as a guarantee because, if you’re unable to repay the loan, the lender can repossess it.
In contrast, an unsecured loan doesn’t require the borrower to provide any security. If you’re unable to repay, the lender will try to recover the money by some other means, such as legal action.
Which loan is best for you?
Determining which loan is best depends on your financial circumstances – and the car you’d like to buy.
Generally, a secured loan enables you to borrow more money. Plus, it usually has a lower interest rate. Sometimes, a secured loan is easier to get than an unsecured loan; for example, your credit score might not need to be as high. This means a secured loan might be better if you’d like to buy an expensive car, and repay it over a long period.
One example of a secured loan is MONEYME’s Autopay. This loan, developed especially for vehicles, lets you buy a car worth up to $100,000 via one of our partner dealers or brokers. It’s also fast and simple, so you could get a car loan in a matter of hours, not days.
An unsecured loan might be preferable if the car you’re after is less expensive or through a private seller, you’re able to repay it reasonably quickly, and you have a reliable credit history.
An example of an unsecured loan is MONEYME’s personal loan. This is available for up to $50,000 and is flexible. It enables you to buy your vehicle from a third party (such as a dealer) or privately, and won’t tie up your vehicle as collateral. Plus, you can use a MONEYME personal loan to buy any type of vehicle – be it a car, caravan, motorhome, campervan, motorbike or boat.
How long does it take to get a secured or unsecured car loan?
This depends on how long it takes your lender to review and approve your application – and then for the funds to reach your account.
The turnaround time for MONEYME’s loans is faster than the industry average – which, for traditional banks, can be several days. The entire process for both our Autopay loans and our personal loans takes as little as 60 minutes – including review of your application, approval, and transfer of funds. You can apply online, so you don’t have to spend time on face-to-face appointments or complicated paperwork. And flexible repayment plans are available.
That means you could find the car (or bike, boat, caravan) of your dreams, and finance it the same day!
Making the decision
There are a number of factors to consider when deciding which loan is right for you including the cost of the car, the interest rate, how long you’ll need to repay, and whether you want to buy through a dealer or private seller.
Whether you opt for a secured loan, allowing for a more expensive purchase and potentially a lower interest rate, or an unsecured loan, providing the flexibility of broader vehicle options and eligibility requirements, the key is to align your choice with your unique financial situation and dream car.
With MONEYME’s swift and efficient loan approval process, you could be driving your new vehicle sooner than you think.