Do I need to provide security?

Choosing your new set of wheels is a big deal. We get it. You want to make sure you select a make and model that suits your lifestyle. You want to feel good behind the wheel. You want to enjoy the ride.

The process of selecting a car loan is equally important. You’ll need to consider a variety of factors to make sure the loan you apply for is the right one for you. One of the biggest decisions you’ll need to make is whether to apply for a secured or unsecured car loan. 

Secured car loan

With a secured car loan, your lender uses your new car as security against the loan (also known as collateral). This means that if you are unable to meet your repayments down the track, your lender can repossess your car and sell it to cover the cost of the loan. Think of it as a security blanket for your lender.

A secured car loan is appropriate for newer vehicle models (usually less than 5 years old) since they are more valuable as an asset. Any asset used as collateral needs to be of equal or greater value to the car loan.

A secured car loan usually comes with a lower interest rate. This means you could potentially borrow a larger amount or pay it back over a longer period.

Unsecured car loan

If you only want to borrow a small amount for a new or older vehicle, and you meet the loan requirements, you may wish to apply for an unsecured loan. With an unsecured loan, you are not required to provide an asset to secure the loan. This means your car (or other valuable asset) is not in the firing line if you are unable to make repayments down the track. It also means you can choose between a fixed and variable interest rate.

But keep in mind, if you default on your loan, the lender may take you to court to recoup the cost of the loan and it will negatively impact your credit report. Unsecured car loans generally come with a higher interest rate because lenders view them as a riskier proposition, and you may not be able to borrow as much as you could with a secured car loan.  

The good news is that Plenti offers flexible loan terms on unsecured loans. That way, you can choose between fixed repayments or the flexibility of variable repayments, depending on your current circumstances.

Which loan type is right for me?

If the car you have in mind is less than 7 years old and valued at $10,000 or more, a secured car loan is probably the best option. This type of loan comes with a fixed interest rate so your repayments will stay the same over the life of the loan, making it easy to factor them into your budget.

A secured loan comes with a lower interest rate and allows you to borrow more money than an unsecured loan. This is because your new car will be used as security against the loan, so it’s less risky for your lender. If you fail to make repayments down the track, your lender can simply take back the car and sell it to cover the costs of the loan.

At Plenti, secured car loans are available from $10,000 to $100,000 for a new, demo or used car under 7 years old with fixed interest rates.

You’ll need to tick a few boxes before you are approved for a secured car loan, including:

• Informing your lender of your new vehicles chassis number, vehicle identification number (VIN), registration number, model & make, year, and colour
• Providing the lender with a copy of your car registration papers
  
• Getting a vehicle inspection (if through a private sale)
  
• Purchasing a comprehensive car insurance policy and having the lender added as an interested party
  

Alternatively, if you have your eye on an older vehicle, or a car worth less than $10,000, you might prefer an unsecured car loan. With an unsecured car loan, you have the flexibility to choose between a fixed and variable interest rate. While a fixed rate offers the security of always knowing how much your repayments will be, a variable rate rises and falls with the market interest rate as it responds to current economic conditions. This means you could end up paying more or less for your loan, depending on the market rate. 

At Plenti, unsecured car loans are available from $2,001 to $45,000 for a car of any age.

When it comes to choosing which loan type is right for you, ask yourself:

• Informing your lender of your new vehicles chassis number, vehicle identification number (VIN), registration number, model & make, year, and colour
• Providing the lender with a copy of your car registration papers
  
• Getting a vehicle inspection (if through a private sale)
  
• Purchasing a comprehensive car insurance policy and having the lender added as an interested party
  

It’s worth taking a minute to request a RateEstimate to find out if you’re eligible to apply for a loan with Plenti. It will also provide you with an estimate of the fees, charges and interest rate that may apply to your loan.

If you’re happy with your rate estimate, we’ll typically finalise successful loans within a day or two of receiving your complete application. You could be hitting the road faster than you think!  

Remember, requesting a free RateEstimate only takes 1 minute. It won’t impact your credit score and there’s absolutely no obligation for you to proceed with a loan application.