The Benefits of Unsecured Car Loans

Unsecured car loans are loans made to you that do not require the lender to hold the title or be named as a lienholder on the title of the vehicle you purchase. There are many reasons why you might want to consider obtaining an unsecured car loan, and these loans can be found even if you have a bad credit score. There are 4 main advantages to unsecured auto loans:

1. Accessibility

Since there is a proliferation of sub prime auto lenders, even those with bad credit scores may be able to obtain an unsecured loan. These loans are easily accessible and do not have the same requirements concerning vehicle age or purpose as secured loans. However, in order to qualify for the loan, you will still have to provide proof of income and many lenders will require a down payment.

2. No Collateral

Because you are not using your car as collateral, the amount of insurance you are required to have on the car may be different, making it more affordable. Lenders only interest themselves in the insurance you have on the car if they have a vested interest in the value the car holds. With an unsecured loan, the lender has no right to the car in case of default, and therefore cannot require you to carry comprehensive or collision insurance if you would otherwise only be required to have liability.

3. Easy Approval and Application

Most unsecured auto loans can be obtained through an online application process and require no more approval time than a traditional auto loan. You can make the process even faster by having your proof of income readily available. Your credit rating will be the main consideration in whether or not you are approved for the loan, but bad credit scores do not necessarily mean not getting the loan, although you might have higher interest rates or be required to make a higher down payment.

4. Flexibility

Because the vehicle for which you are obtaining the loan is not collateral for the loan, the terms of repayment can often be more flexible. In traditional auto loans, the type, make, and age of the vehicle all play a part in determining the length of the loan term. With an unsecured loan, you can extend the payments over a long period of time to keep your monthly outflow low and affordable, or you can minimize the amount of interest you pay on the loan by having a shorter loan term. With better credit scores, you may even be able to qualify for 100% financing.

An unsecured loan may be able to offer you additional options for obtaining the vehicle of choice and is often considered when buying non-traditional vehicles or when obtaining regular financing is more difficult. Be sure to shop around for the best possible interest rates and terms before making a final decision on your unsecured auto loan.

 

 


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