Ever wondered what the difference is between secured car loans and personal unsecured car loans and how that difference affects your finance and their repayments.  The difference can vary depending on the bank or finance company, but is larger when the true cost of each is taken into account.

Before we get into the nuts and bolts of car loans packages , let’s first have a look at the various workings that determine the cost of your loan and of your monthly repayments. The cost of a loan is the total you repay less the sum borrowed. Hence, let’s say you are repaying $20,000 at 12% interest rate over 36 months; you will repay at the rate of $664.29 per month.  That would total a repayment of $23,914.44, and the cost of the loan would be $3,914.44 plus any set-up or administration fees.  A car loan calculator will enable you to work this out for yourself.

An alternative to a car loan package would be car hire purchase (HP), where you hire the car over the repayment period and take delivery of the owership papers to the vehicle with your final payment. Until then the car belongs to the HP company.

However, most credits are either secured or unsecured, and not all lenders offer car loans that are unsecured so let’s look at secured car finance first. Secured car finance is one whereby the lender offers the loan with the car as security.  If you fail to make payments, the lender can sell the car to recoup their money.  It is possible to get a secured car loan if the car is over a certain age, often 7 years, but the car finance term or loan term may be requested to be shorter than the standard 5 yearsor not at all by using your home or some other form of security. These however are not strictly classed as car financing. It is generally the car that is the security.

If you prefer you can request no deposit car finance and have all on-road costs added to the amount financed. Options like registration , loan insurance and comprehensive auto insurance as part of the financing deal.  Loan insurance makes sure that the finance is paid off in the event of your death during the loan period, and car insuranceis needed to make sure that the car is in good condition should it be needed to repay the lend in the event of you defaulting on your loan commitment.

This might all sound like doom and gloom, but these are conditions you see with most secured car loans, not only car loans. Secured car loans terms are from 1-7years, and the interest rate will be lower than that for an unsecured car loan where the finance company charges extra to compensate for their added risk. As with any loan, a deposit will result in lower payments, or a shorter term, whichever you prefer.

You could also apply a balloon, which is an amount borrowed where you pay interest only and finalised the principle when finalising the loan.  This is popular by those whose income will increase over the period, and they will be in a better financial position to pay a lump sum in 3 – 5 years time. This  too  results in either a cheaper repayment per monthor a shorter repayment term.

If you are buying a used motor vehicle, your loan will be priced differently according to the car finance company and the age of your car. Many will charge higher loan rates, and the current credit crisis has changed the outlook of many lenders to unsecured car finance in particular. Many no longer offer unsecured car finance due to the increased risk in the current economic climate.

However, they are still available, and some online brokers can assist in getting you a good low rate unsecured car loan. In addition to the interest rate on such loans, you should also evaluate the fees charged, since they can involve a considerable outlay for you before you get the loan.

The key differences between secured and unsecured car loans, therefore, can be summed up as:

Secured car loans are more affordable to repay, with generally lower interest rates.

You need to have full comprehensive car insurance with all secured car loans, while unsecured loans do not.

Both loans could require life insurance cover for the finance, but secured car loans are more likely to.

You can sometimes include comprehensive insurance, registration and other costs in the secured loan, but with an unsecured car financing you must include the the costs on top of the amount borrowed.

Fees for unsecured car loans can be greatly higher than for secured car loans.

Not all lenders will offer unsecured auto loans.

There few doubts that if your car is young enough to be given a loan with the car as colateral, then that should be your option.  You might be able to arrange a secured loan for an older vehicle with your dwelling as security, but you will have to make sure to maintain the payments since lenders are becoming unsympathetic in the current economic down turn.

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Sometimes, it is very difficult to become familiar with all the vocabularies in relation to personal loans. Personal loan is something which must very well be understood ahead of making any decision about it. There are so many explanations why you may opt for personal loans. If you look up for the right information about personal loans, you may be able to get what is right and perfect for you. Your aim should be safeguarding your money and nothing ought to be done that will plunge your finances into jeopardy.

A lot of resources exist in books that teach about personal loans. If you get a copy of such books, you should know that you are making a choice which is synonymous to a very great investment. Always keep in mind that to be forewarned is to be forearmed. This should be the best approach when you seek financial decisions and especially when it involves making a decision about loans.

One good book to read is Gary W. Eldred’s “Beginners Guide to Real Estate Investing”. This deals with realties in general, but there are adequate materials in it on the subject of personal loans. What you should know is that this text contains almost the best information that will help you make the best decision if you think of personal loans for real estates.

Another text, “The Book of Inside Information”, puts into plain words the basics of getting and dealing with a personal loan. This text goes beyond a mere explanation of personal loans to offering advices and tips of dealing with family finances. Another very recent publication is “The 21st Century Family Legal Guide: The Law You Must Know to Protect Yourself and Your Family”. Although a very practical text, there is still abundant and brilliant material in it which deals with personal loans.

You should be happy because every good text that gives you the basics about personal loans will also provide you with useful information on how to redeem every personal loan. For example, “Live Debt Free” (3rd Edition) has reliable tips for paying off loans. Remember that this text will never teach you of any means to become prosperous. Rather, it teaches you on means to better manage your money and better management of your money is one of the keys to becoming prosperous.

There are also some excellent periodicals such as Money Today and Reader’s Digest which offers write-ups that give an idea about which loan should be best for you. Most of such valuable information can also be reached through the internet. Also remember to go through the analysis always provided by the National Consumer Council on matters relating to personal loans.

Getting any of these texts is not enough. The key to every successful financial decision or decision on personal loan remains in your ability to go through and understand what is in the text. You must be able to understand and appreciate the ins and outs of personal loans. Remember to go in for books which have a balanced approach to personal loans. Keep in mind that you must appraise the excellent as well as poor resources on personal loan before you make a good decision.

Also think about texts that will offer you with tips of repaying your personal loan. Remember that you must also know how to manage your debts as well as your spending pattern in order to move out of debts. Always make an endeavor to read these texts. It may be time consuming. But the rewards are far greater than not reading these books. Some of these materials will be obtained either from the internet or from a library.

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So you have used your credit cards to the maximum and now you cannot pay it off? Well, you are not alone in this world. As the matters of fact, there are a lot of people doing just what you were doing. A lot of factors maybe effecting you these day that you need more money than what you have right now. You might be just loose your job, of someone in the family got sick and you have to pay for the hospital bills. The list of problems can go on and on, but the point is that if you cannot find any other source of income, you better start looking for personal loans assistance.

What is Personal Loan?

Personal loan is a type of loan from the bank that can be use by the borrowers for personal matters. The periods which the loan needs to be paid off will be varying from months to years depending on the agreement between the borrowers and the bank. The interest rates that being charge also will be varying but mostly between 8% to 20%. If you want to get a best deal, you just need to talk to a lot of banks; however there are a lot of banks that will not give personal loans to people who has bad credit history.

What is high risk personal loan?

That’s when high risk personal loans come in handy. High risk personal loan is a type of personal loan that can be given to the people who have bad credit history and do not have any collateral. This type of personal loan is very risky to the bank. That’s why to compensate the risks; the bank usually charges a higher interest rate. Before you apply for high risk personal loans, you should know about the advantages and the disadvantages related to high risk personal loans.

The advantages of high risk personal loans

There are quite a few advantages of high risk personal loans, the most common advantage would be, it is easier to apply and to be accepted than any other type of loan, even when you have bad credit history. You don’t have to own a house or a car or any other things to be provided as collateral, yet you still can apply for high risk personal loans. And another advantage with high risk personal loans is the money that you get, can be use to pay off your credit cards, thus it will increase your credit rating.

The disadvantages of high risk personal loans

High risk personal loans also come with a couple of disadvantages, the most common one is that it has a higher interest rate compare to any other loans. Another disadvantage would be the term and condition of the loan is stricter. Therefore with High risk personal loans you simply going to pay more and if you have a default payment you are going to end up with more debt than before.

Now that you know both the advantages and the disadvantages of the high risk personal loans, you can weigh them to see whether applying for one would be a good choice or not. But as the rules of thumb is only apply as your last effort.

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What is a Bridging Loan?

A Bridging Loan is short term funding to provide temporary financing until more permanent finance can be found. Bridging Loans are available for a whole range of financial requirements and can be on the basis of a 1st, 2nd or even 3rd charge equity release, usually provided for any legal purpose.

Examples: 

Commercial & Residential Purchase Commercial & Residential Refinance Auction Purchases Capital Raising * Chain Breaking Refurbishment Speculative Deals Business Cash Injection Defective Property

 

* Capital raising funds can be used for many reasons including holidays, overseas property investment and tax bills etc.

Security 

Residential Property Commercial Property Land (with or without planning permission in place) Real Property (such as Plant machinery)

 

Bridging Loans carry a higher interest rate than standard mortgage lending and at the offer of loan stage there will be an agreed term of repayment, normally between one day and two years.

Bridging Loans are most commonly used when the financing requirement is urgent and beyond the timescales that a standard mortgage lender or bank could provide. In some cases Bridging Lenders can provide funds within 24 hours. Another common use of bridging finance would be to fund the purchase a new home prior to the existing property being sold.

Characteristics 

Bridge loans will almost certainly carry higher fees which can include: 

Administration Fees Arrangement Fees Legal Fees Completion Fees Valuation Fees Exit Fees ** Broker Fees (normally non-disclosed)

 

** A fee charged to redeem the loan, typically equivalent to one month’s interest payment.

As most bridging Loans are not regulated by the Financial Services Authority the above fees can vary substantially as they fall within no boundaries or guidelines, only competitive pricing.

Application 

Bridging Lenders will consider loans to discharged bankrupts and clients with adverse credit such as CCJs and IVAs. They will lend to individuals as well as Businesses, Ltd Companies and tax efficient vehicles such as SPVs.

Variations 

Bridging Loans are split into two main categories:

Closed Bridging Finance 

At the time the funds are drawn down there is a firm exit in place to repay the loan normally within a short period of time. The most common use of Closed Bridging Finance would be the pending sale of an existing property on which contracts have been signed and exchanged/missives concluded

Open Bridging Finance

At the time the funds are drawn down there is no fixed exit or repayment method for the lenders comfort, only an agreed maximum term that the loan can run for. Seen as higher risk than closed Bridging Finance it is therefore more expensive.

Other forms of short term finance:

Mezzanine Finance

Often a combination of debt and equity stake which is typically used to finance the expansion of existing companies. To secure mezzanine finance the business would normally have to demonstrate a track record in the industry with an established reputation and product, a history of profitability and a viable expansion plan for the business (e.g. expansions, acquisitions, IPO).

Lenders

There are over 20 Primary Bridging Lenders in the UK that are able to lend their own funds and therefore set their own criteria of risk.

Private Financers

Should Bridging Lenders decline to lend, Private debt and equity financers can be sort to provide funding for the examples above. This type of finance is normally very expensive.

Specific Uses

Bridging Loans can be used as a Below Market Value (BMV) purchase instrument where the initial purchase takes place at the lower purchase price allowing a subsequent refinance application to be placed with a mainstream lender for borrowing based on the Open Market Value of the property with the purpose of releasing the difference in equity between the purchase price of the property and the higher resulting remortgage loan.

Costs

Bridging Loans typically cost between 1-2% per month. Variable rates with margins over Libor can sometimes be applied as an alternative or an addition.

Find an Independent Bridging Finance Broker to give you all the available options.

 

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