What is a Secured Car Loan?

Secured car loans are typically available to individuals with low, poor or bad credit. They are used as a way to make credit terms available to individuals who may not otherwise qualify for a loan.

What is a Secured Car Loan

What makes a secured car loan different from an unsecured car loan is the fact that these loans are supported with collateral. The security features can include high down payment amounts, the use of an escrow or secured account to back the loan and other assets that are pledged against the loan. The security provides a level of protection for the lender should the borrower default on the loan.

Caution Regarding Secured Car Loans

Secured loans should be used when opportunities for borrowing are limited. Finding ways to raise a consumer credit score, including paying off outstanding debts when possible and borrowing from family members or friends, may help lower the reliance on a secured loan or lower the amount needed to secure a car purchase.

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