Discussion
looking at borrowing a few quid for a new toy (car). Firstly any idea's who I could get the best rates from but secondly what is the difference with secured and unsecured loans. Surely if you default on an unsecured loan the lender will still potentially take your assets.
I know it's an obvious question but some guidance would still be appreciated.
Cheers
Steve
I know it's an obvious question but some guidance would still be appreciated.
Cheers
Steve
Secured is just that, secured on an asset, usually this term refers to your home. You can also get various types of finance which are secured on the vehicle itself so that if you default they can reposess it.
Unsecured is money lent to you based on your credit rating / ability to repay.
The best APR's could be either on a secured or unsecured basis. Sorry to be vague but it depends on:-
How much you want to borrow
How long you want to borrow it for
What deposit you can put down for the car
Your risk profile to the finance company
I reckon unsecured you should be able to get 7-9%, but I'm sure a car dealer will be along shortly to give you more accurate information.
Unsecured is money lent to you based on your credit rating / ability to repay.
The best APR's could be either on a secured or unsecured basis. Sorry to be vague but it depends on:-
How much you want to borrow
How long you want to borrow it for
What deposit you can put down for the car
Your risk profile to the finance company
I reckon unsecured you should be able to get 7-9%, but I'm sure a car dealer will be along shortly to give you more accurate information.
You're right pretty much. If it's unsecured they could still repossess assets but it may not be the car they go for. They may, for example, put a charging order on your house.
Secured motor finance has other advantages though (if it's a regulated agreement) such as the halves and thirds rule. Once you've paid half of the total amount payable including interest, you can, if you so wish, hand the car back to the finance company with nothing more to pay. Useful if you're in negative equity. The thirds rule basically means that they can't repossess the car without a court order once you've paid more than a third of the total amount payable. Plus you can get balloons, guaranteed future values et al.
Though it does ultimately all depend on your personal situation and what suits you best so do shop around.
Secured motor finance has other advantages though (if it's a regulated agreement) such as the halves and thirds rule. Once you've paid half of the total amount payable including interest, you can, if you so wish, hand the car back to the finance company with nothing more to pay. Useful if you're in negative equity. The thirds rule basically means that they can't repossess the car without a court order once you've paid more than a third of the total amount payable. Plus you can get balloons, guaranteed future values et al.
Though it does ultimately all depend on your personal situation and what suits you best so do shop around.
Can't believe I actually asked the question 
but thought I would just check. So in essence it makes the lenders job easier to get their money back and from a specific asset if you default.
I'm looking at my options really, my credit rating is perfect but some of the deals out there don't seem to brilliant. I know there is a lot of risk factored in with the lenders but I know I am a good risk.
cheers
steve
but thought I would just check. So in essence it makes the lenders job easier to get their money back and from a specific asset if you default.I'm looking at my options really, my credit rating is perfect but some of the deals out there don't seem to brilliant. I know there is a lot of risk factored in with the lenders but I know I am a good risk.
cheers
steve
sone said:
Can't believe I actually asked the question but thought I would just check. So in essence it makes the lenders job easier to get their money back and from a specific asset if you default.
I'm looking at my options really, my credit rating is perfect but some of the deals out there don't seem to brilliant. I know there is a lot of risk factored in with the lenders but I know I am a good risk.
cheers
steve
Try Zopa, risk based pricing but thought I would just check. So in essence it makes the lenders job easier to get their money back and from a specific asset if you default.I'm looking at my options really, my credit rating is perfect but some of the deals out there don't seem to brilliant. I know there is a lot of risk factored in with the lenders but I know I am a good risk.
cheers
steve
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