You’ve decided on your new car: now it’s time to choose how you will secure the funds to make it yours. When you start researching financing options, you’ll quickly find two types of car loans: secured and unsecured. What do these terms mean, and how will they affect you?
What is a secured car loan?
If a loan is secured, it is borrowed against an asset of greater value, which acts as collateral for the lender against the borrowed amount. A secured car loan will usually use the car you are purchasing with your loan as security.
This security lowers the lender’s risk. If you are unable to make your repayments, the car will be repossessed and sold so the lender can use the funds to make up the outstanding balance.
Since there is a lower level of risk, you may benefit from more favourable terms as a borrower. Lower interest rates are common on secured loans, especially compared with their unsecured counterparts.
Handy Finance only offers secured car loans.
What is an unsecured car loan?
An unsecured loan does not require collateral. In a car loan, this means that if you can’t make your repayments, it is harder for lenders to recoup their costs as they have no claim on the car you’ve purchased.
While you don’t have to put up anything as security against the loan, it could mean that you have a higher interest rate to offset this risk.
Car loans from Handy Finance are always secured – we do not offer an unsecured car loan option.
Benefits of Secured Car Loans
Secured car loans offer several advantages that make them an attractive option for borrowers. Due to the reduced risk for lenders, these loans typically come with the option to borrow larger amounts.
Additionally, secured car loans are usually easier to obtain compared to unsecured loans, as they present less risk for lenders. One of the main benefits of a secured car loan is the potential for lower interest rates.
This reduced risk allows lenders to offer more flexible terms, making the overall loan more affordable. Many secured car loans also feature fixed interest rates, ensuring consistent payments and facilitating easier budgeting.
If you have more questions about secured car loans, you can give our credit team a call. Our experts are here to help you work out which loan option is the best for your needs.
How can I get a secured car loan?
You can get a secure car loan by applying through a reputable lender, such as Handy Finance. We only offer secured car loans.
A car loan from Handy Finance can be between $2,001 and $75,000 and have a loan term of one to seven years. Secured car loans will always have a fixed interest rate, meaning your repayment sum doesn’t change over the life of the loan. It can be repaid in weekly, fortnightly or monthly instalments – and if you want to repay your loan early, you can. There is no early repayment fee.
Here are the steps you need to follow to get your secured car loan from Handy Finance:
Ensure you meet the eligibility criteria
The eligibility criteria for secured car loans are as follows:
- You must be 18 years of age or older
- You must be an Australian citizen or permanent resident
- You must be currently employed, which includes self-employment
- You must not have a history of bankruptcy or be party to a court judgment
- You must not have any outstanding or unpaid defaults.
To prove you meet this, you’ll need to submit documentation when you lodge your loan application. This includes ID such as a driver’s licence or passport and three months’ bank statements. You’ll be prompted to supply these statements through the Illion Bank Statement Service. This secure service allows Handy Finance to access and verify your statements – it doesn’t give Handy Finance or Illion the ability to make transactions on your account. You can read more about the service at www.bankstatements.com.au.
You may also be required to submit information about the car you intend to buy with the loan.
Complete your application online
Got everything you need? Now it’s time to apply for your loan. Handy Finance has streamlined our application process, providing an easy-to-use online application form where you can submit your application for the loan.
You can also apply for pre-approval through this portal. Pre-approval is an excellent way to know what your borrowing power is before settling your loan. You will receive a conditional offer from Handy Finance that states the loan amount you will likely be approved for and the loan terms. You’ll get up to a month to review these terms before settling.
Another way to check your borrowing power before submitting your application is to use our car loan calculator. This tool allows you to plug in your ideal loan amount, terms, credit score and repayment frequency. It provides an estimated interest rate and repayment sum that could help in your decision-making process.
Once you’ve submitted everything, our credit experts will get to work. You should receive an indicative offer within minutes of submitting your loan application. If approved, you will receive the funds in your nominated bank account within 24 hours.
Tips for Choosing the Right Secured Car Loan
When exploring which lender will offer you the best type of secured car loan, there are a couple of factors to weigh up. Fixed interest rates remain constant over the life of the loan, ensuring that your repayments are predictable and stable, making it easier to budget. On the other hand, variable interest rates can fluctuate with market conditions, potentially leading to changes in your repayment amounts.
With Handy Finance fixed-rate car loans, you can better manage your finances and avoid the uncertainty that comes with variable rates. This stability allows you to plan your budget effectively and ensures that your monthly payments stay consistent, providing a reliable and straightforward borrowing experience.
Discover flexible secured car loan options from Handy Finance
There is no correct answer when it comes to choosing between a secured or unsecured car loan – this will depend on your financial situation. Before choosing any loan or lender, do your research. Compare the factors we’ve covered in this article and ensure you select a loan that will meet your needs and not place extra financial pressure on your life.
Handy Finance Secured Car Loans are a fair and flexible financing option for a new car. Find out more about our secured car loans online today. We also have a range of other secured vehicle loans, including caravan loans, motorcycle loans, boat loans and jet ski loans.
