CAR LOAN VS PERSONAL LOAN WITH TURBO FINANCE BRISBANEWhat you need to know before you apply for a loan
- May 15, 2017
- Finance Information, Uncategorized
- Posted by Turbo Finance
- Comments Off on CAR LOAN VS PERSONAL LOAN WITH TURBO FINANCE BRISBANE
When it comes to the issue of ‘car loan vs personal loan’, it’s helpful to understand the subtle differences between each type of lending. Both loan types are enormously popular and relatively easy to obtain. Let’s take a look at the variations and what to look out for. Note that when you see a professional finance broker, you’ll get all the advice you need to apply for the right kind of loan. Apply for the wrong loans will harm your future credit rating. A finance broker can change your financial future!
Secured and unsecured loans
A personal loan comes with repayment term flexibility and allows you to use the funds at your own discretion. A personal loan can be secured and associated to an asset – such as a car, boat or business – but typically they are granted as an ‘unsecured’ personal loan.
A car loan is effectively a secured personal loan; that is, a loan that is protected by the purchase of an asset, in this case a vehicle. Whilst a personal loan can be used for a variety of purposes, a car loan is strictly for the purchase of a car.
When you opt for a secured car loan your vehicle acts as collateral. If you fail to make an agreed fixed instalment repayment, the lender may seize the car. It is also important to note that until the final payment is made, just like with a home loan, the asset remains the property of the lender.
As the name suggests, an unsecured personal loan is a slightly riskier option from the perspective of a broker or bank, so interest rates are higher than a comparable secured loan. Personal loans also tend to also come with stricter approval restrictions.
Opting for a secured personal loan, or a dedicated car loan, will allow you the benefit of a lower rate and will become a cheaper option for you in the long term. Deemed a lower risk, secured loans also offer consumers a fixed interest rate giving greater budgeting ability. A fixed rate removes the stress of payment fluctuations that can often occur with interest rates over the life of a loan. The downside to this is that your loan is locked in and typically prohibits you the opportunity to make additional repayments or pay out your loan earlier without penalty.
Choosing the right loan for your needs
At the end of the day, whether you choose a car loan or a personal loan, the key is to ensure that you choose the right product to suit your needs. Knowing how to decipher the details of a secured or unsecured loan, determining whether a fixed or variable rate is most appropriate and even understanding the terms of the application can be tricky. That is why is it makes sense to apply via a finance broker.
If you’re confused about the pros and cons of a car loan vs a personal loan, talk to a finance expert. As an independent third party, an experienced broker will present you with only those options that suit your unique situation and work to cut through the red tape, ensuring a smoother application process.