Secured car loans – affordable financing options for fixed income people in the UK

What is a secured car loan?

Owning a car as a luxury is a thing of the past, today a car is a must have for every family. Unfortunately it is still not very affordable especially if one belongs to the fixed income middle class bracket.

So what does one do if they need to buy a car? Look for financing options of course.

There are various kinds of car loans available in the market but the cheapest bet would probably be to avail of a loan that is secured, i.e. a secured car loan.

How does one avail of a secured car loan?

A secured car loan is very similar to other secure loans, in that one is required to offer collateral in order to avail of the loan.

These kinds of loans are ideal for people with fixed incomes who do not have the money for down payments or outright purchases.

One can avail of a secured car loan by either offering their house, some other fixed asset or the car in question as collateral. The interest rates are based on the current market rates and may very slightly from lender to lender.

Different lenders might also have different schemes that one can opt for. The interest for the loan amount is divided over the term and this amount is added to the monthly amount that is repayable.

The total amount becomes the monthly amount that one would need to pay the lender.

Car Loans: Eligibility and precautions

The eligibility for secured car loans is similar to that of other secure loans.

Outlined below are some of the eligibility factors and the things one must look out for while applying for the loan.

It has to be noted however that these are broad factors and are generally applicable for all lender.

Each lender might have additional requirements / conditions which are applicable just to his loan.

Eligibility:

• The person must be 18 years or over and a resident of the UK.

• The person should be residing in the UK for at least a year prior to his loan application.

• Residence and Income proof are to be provided.

• Sufficient collateral to be offered to cover the loan amount.

While applying for the loan, it is very important that the borrower compare competitive loans in the market to make sure that he is getting the best and cheapest deal.

The borrower also needs to understand all the terms and conditions of the lender before taking on the burden of the loan.

It is also of crucial importance to remember that one should only borrow an amount that is comfortable on the pocket.

In case if irregularity and defaulting on the repayments the borrower can lose the asset that he has offered as collateral.