Different financial institutions have different requirements
when a car loan application is submitted.
Generally, secured loans are easier to obtain as the car
you are buying is a security for the loan. Also, the interest
rate is lower and term and conditions of the loan are better.
Essentially, the lower the risk to the lender the better
loan terms for consumers can be offered.
Unsecured car
loans on the other hand require higher interest
rates and stricter loan terms and conditions as the lender
cannot claim the car in the event that consumers default
on their loans.
To calculate the true cost of each of those loans several
other factors must be taken into account. The main additional
cost is the loan application fee or administration fee.
Most loans will have account keeping fee which may wary
with different lending institutions. Also late payment fees
may be included in your contract as well.
A car loan of $20,000 over 5 years time period with 10%
interest rate will have monthly repayments of $425 or $98
per week. Over 5 years or 60 months your total repayment
will be $25,500 plus loan application fee and any account
keeping fees.
If the car is brand new your loan terms and conditions
will be better. For the second hand car loans the lender
may require you to take shorter loan time period, in this
case your monthly repayments will be higher but you will
achieve savings as your loan will be paid off sooner.
Both type of loans do not require a deposit. However by
paying a deposit you will save money on your loan.
Registration, comprehensive insurance and loan insurance
can be included in your secured loan. With unsecured loans
you must pay for those costs separately.
Comprehensive car insurance is needed as apart of security
for the loan and loan insurance is insuring the loan itself
in the event that you may not be able to work and repay
your loan.
Secured loans time period is from 1 to 7 years. You must
have full comprehensive car insurance with secured loans.
For unsecured loans full comprehensive car insurance is
optional.
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