What is a Secured Car Loan & How Does it Work?

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There’s a variety of different types of loans available to Los Banos and Modesto shoppers. Secured loans are on of them. What is a secured loan? How does a secured loan work? Get the information you need from the Smith Chevrolet Of Turlock finance department, and when you’re ready, apply for financing with us.

 

 

What is a Secured Auto Loan?

When you take out a secured auto loan, the lender is protected by collateral that you put down. If you don’t pay the loan, the lender keeps the collateral. In the case of a secured auto loan, the vehicle you purchase with the loan is usually the collateral. Are all car loans secured loans? Not necessarily, but they are very common. Home loans are a great example of a secured loan—the house is used as collateral.

On the flipside, unsecured loans are often called signature loans or personal loans. They’re not secured with collateral, so they tend to have much higher interest rates to protect them.

How Does a Secured Auto Loan Work?

When you apply for a secured auto loan, you’ll be asked for personal information that includes your name, Social Security number, and some details about your current finances, like your income. This information will be used to conduct a credit check. The results of your credit check combined with your income information will be used to determine your loan’s interest rate. Depending on the lender, there might be additional secured loan criteria you’ll need to meet to get approved. If you do, then you’ll be offered the fixed rate of your loan. And once you have your secured auto loan you can start shopping for a new vehicle, which will belong solely to you when you finish paying off the loan. If you don’t meet the terms of your secured loan, the lender can repossess the vehicle.

Get Secured Auto Loan Information & More with Smith Chevrolet Of Turlock

At Smith Chevrolet Of Turlock we’re happy to give you the information you need when it comes to buying and maintaining your vehicle. If you’d like to learn more about the car-buying process and how to get your next car within your budget, pay a visit to our car-buying tips. We’re here to make the buying process as straightforward as possible.

 

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