When thinking of buying a car through a loan, ensure that the monthly outgoings towards the loan are less burdensome. Usually, the aspirant buyers prefer taking out . However, the loan comes at desired rate and conditions only when you take it out with lots of considerations.
Secured car loan require you to pledge any of your property like home or any less significant asset, as collateral. However, if you do not wish to risk your home, then the very car, you intend to buy, can serve the purpose of collateral. The deal papers of the car will be in the lender's possession until you repay the loan completely. Until then, you can drive the car. The loan amount depends on value of the car. These are short-term loans, with duration of 5-7 years.
Because of collateral, these loans carry low rate of interest. The rate may fall further, if the borrower has an excellent or good credit history. This means that you should take out your credit report and check it for any inaccuracies in it. The lenders will go through the report to assess the risks. In case, the borrower's FICO score is low, then it is advisable to apply for the loan with improved score, on paying off some debts.
Do not expect a low rate of interest if your credit history has blemished record of late payments, defaults, arrears or CCJs. You are a high-risk borrower. Still, there are methods of lowering the rate for you.
For instance, you can make a greater down payment to the lender. Down payment is a way of cutting your risks for the lenders. Therefore, if you carry a bad credit history, make greater amount of down payment for ensuring lower rate of interest on the loan.
Do not apply to the first secured car loan offer you see on internet. Make more search and you will come across many such offers. Apply for the rate quotes and compare them along with additional charges. Check the car for any defects in it, before buying it.
