In the auto loan world, there are two types of products: there are secured and unsecured loans. Most people get secured car loans because of the interest rate they are getting but disregard the advantages of unsecured car loans.
One of the biggest advantages of an unsecured car loan is that the vehicle itself is not considered collateral. In the event that you might stop the monthly payments for various reasons, the car cannot be repossessed. While nobody wants to get in that situation of having their car taken away, it does offer some peace.
Another advantage of unsecured car loans is that unsecured car loans are available to everyone, no matter what their situation is. All that matters is your credit score. As long as you do not have a bad history with lenders, you should be able to get an unsecured car loan.
Lastly, when people talk about the advantages of unsecured car loans they always mention the terms. In reality, unsecured car loan terms can be very flexible. Lenders offer the option to pay the loan back quickly and cut your losses in terms of interest payments or they can even reduce your monthly payments if you have a secure financial situation. If you have a good credit score, lenders may even offer the option of 100% financing. This means that you could get a car with no money out of pocket.
These are the most noteworthy advantages of unsecured car loans. The only complaint some would have is the higher interest rate. However, depending on your lender, that can be negotiated as well and there are ways to do that. Having a larger down payment, proof of income, and good credit, may make it possible to get a better interest rate. What matters is to not rush and accept the first offer you get. Shop around and look for dealers and lenders that have flexible terms.
