Different Car Loan Options for Your Personal Use
There are many car loan finance options, and each of them is different in many ways. This means that choosing a specific one for your particular needs and circumstances can be rather daunting as each one serves a unique purpose. Of course, you want to be able to make the best decision possible, so we are creating this guide to help you. After all, you can either get a good deal or a bad deal and making an informed decision will ensure that you get the former. So to find out which of the many car loan finance options available is best for you, read on!
Personal Car Finance
First on the agenda is Personal Car Finance, which is what you should be considering if you are acquiring a new vehicle for your own personal use. There are two types of personal car finance. First, we have secured loans, and of all the loans that you can acquire, this is by far the most straightforward and the easiest one there is. In a nutshell, the lender uses the vehicle that you are purchasing as security or collateral against the loan, so they can legally repossess it if you default on your loan commitment. This is what makes is secured—at least, on the lender’s side. Because of this, the lending criteria are not very strict, and you get to enjoy reasonable fees and interest rates to boot!
The second kind of Personal Car Finance comes in the form of unsecured loans. This is very versatile kind of loan and can actually be used for other purposes, apart from buying a vehicle. The unsecured nature of this loan stems from the fact that there is no security or collateral involved, so essentially, the lender takes a bit of a risk with this kind of loan. That is why when compared to secured loans, unsecured loans generally have higher fees and interest rates.
Second Chance Finance
Now, you may have had some financial difficulties in the past, which may have led to you filing bankruptcy or ending up with a bad credit history. Or you may just be starting to build a credit history from scratch and, therefore, still have no credit to speak of. In these situations, your chances of acquiring a car loan may be slim to none. This is where Second Chance Finance, also known as bad credit car loan,comes in. Although it is not easy to acquire such a loan, it can still be done. You just have to be prepared to jump through flaming hoops to be able to qualify for such a loan.
No Credit Check Car Loans
If you are recently out of bankruptcy and would like to get a bad credit car loan, you will need to prove that your finances have considerably improved. This means gathering paperwork to substantiate this, such as bank statements that show your good savings record. You will also need to prove that your residence and employment are both stable, as well. For those who have bad credit, no credit check car loans are your best bet. Simply put, no credit checks will be performed with this type of loan. However, fees and interest rates will be considerably inflated, so it is always best to use this as a last resort.
Loan Protection Insurance
Last but not the least, we have Loan Protection Insurance. This comes in handy if you somehow get seriously sick, suffer an injury or disability, lose your job, or even die. Basically, this product will either pay off your entire loan balance or cover your monthly loan repayments. This ensures that your family will not be left to deal with your debts if you are somehow financially or physically incapacitated, so you get valuable peace of mind and security at all times.
Other Insurance Products for Your Loan
And speaking of insurance, you can actually opt to invest in a variety of other insurance products to supplement your car loan. First, consider Guaranteed Asset Protection Cover, or GAP Cover. Also known as shortfall insurance, this applies if the total loss of the vehicle occurs due to theft or accidents. In this situation, usually, your comprehensive insurance will pay for the current market value of the vehicle. However, when you factor in depreciation, this may not be enough to settle your car loan balance. This difference or gap will then be covered by GAP cover, so you will not have to pay for the shortfall.
Extended Warranty Cover for your vehicle is also available. Basically, you will be able to extend your vehicle’s standard warranty for up to three more years with this option. This way, you will not have to pay for servicing and maintenance out of pocket.
Lastly, there is the mandatory Comprehensive Insurance. This is actually required by most, if not all, car loan lenders and finance companies. This works by insuring your vehicle against all known scenarios, such as calamities, accidents, and even criminal acts.
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