What are Unsecured Car Loans?

Unsecured car loans are loans that do not require collateral to guarantee against default. They tend to be more expensive than secured car loans because of the additional risk a lender must absorb.

Advantages of Unsecured Car Loans

The biggest advantage of an unsecured loan is your assets will not be seized in case of default on your auto loan. Or, if you do not have a large asset to place as collateral, an unsecured loan may be the only option available to you.

Problems with Unsecured Car Loans

Unsecured car loans come at higher interest rates meaning they ultimately cost more. Your assets are not entirely protected, either, as they may still be seized if you declare bankruptcy. In the event your assets are subject to liquidation, you may lose your home, business or automobile whether or not they were used as collateral for a loan.

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