Aside from your home, a good car is one of the largest single purchase you will probably make. However, when you don’t have enough savings to pay for it right away, you will have to borrow some funds. By that, you can pay off your loan over time, depending on what brand you pick.
What is a secured loan?
When you say secured car loan, it simply refers to assets which comes with a warranty in exchange for the loan. Most of the time, collateral comes in the form of actual items. When the borrower doesn’t meet the terms of the car title loans San Diego, eventually the lender will take the ownership of the asset.
In most cases, secured car loan requires car itself to be the collateral. However, you can determine if it’s secured when the lender asks for the following requirements:
You need to provide a proof of stable source of income. This typically takes the form of employment record. Preferably, the applicant should prove that they are financially stable for a minimum of 12 months. But for self-employed people or individuals with other source of revenue like inheritance or spousal support, many lenders won’t hesitate working with you.
- Verifiable income
In every car loan, it is necessary that you present a verifiable income. It can be copies of the federal tax returns (for self-employed), paycheck stubs of your last payment or bank statement, showing regular deposits every month.
Lastly, proof of residency is also a must to demonstrate your steady residency in your present home for the past one year. But, if you’ve relocate recently into your recent residence, you should present a strong evidence that you’ve stayed in one place for a minimum of 12 months.
What To Keep In Mind?
- It allows you to pay smaller amounts in a span of time
Unlike unsecured auto loan, secured auto loans run between 3% to 5%. They also pushed out on not more than 72 months or as much as 84 months. That simply implies that secured auto loans are better options if you are planning to buy a car.
- It has lower income requirements.
Since the loan for a car could be safe against collateral, lender is not that strict about requiring a particular level of income for the borrower to get qualified. It is the reason why secured auto loans are the best option for prospective buyers who can significant income from freelancing or investments.
Planning to Get a Car Loan?
Be sure to compute first your expenses and income prior to choosing whether you’ll get secured or unsecured car loans. Sure thing, you’ll get tempted to get an loan from a car financing company when your monthly budget doesn’t enable it. When that happens, think and look at the possible consequences and implications which might occur if you’ll pursue it.
Now that you know how to tell when you get a secured car loan, you better find the right loan company to get your loan. Do your own research to make an informed decision and you’re good to go!