SECURED VEHICLE LOAN
Secured Vehicle Loan
Secured vehicle loans in New Zealand are the most common forms of car loans offered by loan providers. For the lender, this is a risk-free credit facility as they hold a lien against the vehicle. If the debtor fails to pay, the lender has a legal right to repossess and resell the car to recover their funds.
A secured vehicle loan is a form of credit that requires collateral; in this case, the vehicle you are buying.
The amount of money given as vehicle loan depends on the vehicle value. However, if the car cost is unclear, the lender provides a preapproval indicating the amount they are willing to lend.
Advantages Of Secured Vehicle Loans In New Zealand:
Low-interest rates: since the risk involved with a secured vehicle loan is minimal; the lender offers a lower interest rate compared to an unsecured vehicle loan.
A client with bad credit can obtain this loan: the risk involved for the lender is low, as, in case of default, they can recover the vehicle and resell to recoup their money. However, the interest rate charged for this is likely to be high.
Fixed interest rates: the repayment amount you pay is constant throughout the loan term; there are no uncertainties attached to a secured vehicle loan with a fixed rate.
Down payment: some lenders do not require a deposit for secured vehicle loans in New Zealand.
Clients with unstable and unpredictable incomes can get financed, e.g. self-employed: since the risk involved in secured car loan is low, the lenders can finance such clients.
Disadvantages Of Secured Vehicle Loans In New Zealand:
Vehicle repossession: in case you default the loan, the lender can legally repossess your car and resell it to recover their losses.
Limited car age and model: lenders limit the secured car loans to new vehicles and used vehicles of a certain age and model. The lender targets to finance vehicles they can easily resell to recover their funds quickly.
Fixed rates are not flexible: in case your finances get strained, some lenders do not revise the loan tenure and the monthly repayments. Meeting such obligations can be impossible for you to honour.
Early repayment penalties: some lenders charge an early-exit fee to someone who repays the secured car loan before the loan term ends. These charges end up costing you extra money.
Requirements For Acquiring Secured Vehicle Loans:
Secured Vehicle Loan Application
Even though loan providers have different terms and regulations on secured car loans, some elements cut across all lenders.
The applicant:
Must be 18 years and above.
Should have a proof for a stable income.
Should hold a full or restricted drivers licence
Must be a permanent resident in NZ.
Documents Required For Secured Vehicle Loans In New Zealand:
Identification documents: a valid passport or driver’s license
Proof of residence: utility bill in your name.
Proof of income: use your latest pay stubs for the last couple of months.
Factors To Consider When Comparing Secured Vehicle Loans In New Zealand:
Secured Loan Terms
Interest rates: Lenders offer different rates for secured Car loans. Use an online vehicle loan calculator to determine the total amount to be paid as interest. The lender whose interest amount is lowest is the best option.
Fees: compare the set-up fees among the lenders. Some lenders charge more expensive than others. Choose the one with the best offer.
Penalties: some lenders penalize a client who settles the loan before the term is over while others don’t. These penalties can cost you a lot of money; it is advisable to evade such contracts.
Repossession terms: some Lenders have strict conditions for defaulting loans. It is good to know the lender’s terms for repossession before signing any documents.
Loan tenure: some lenders offer fixed term for secured vehicle loans. Be sure to choose one that suits your budget. Also, choose a lender who is open to revising your loan term and monthly payments, in case any financial situation arises, this flexibility will come in handy.
Secured Vehicle loan in New Zealand
Acquiring secured vehicle loans in New Zealand is not complicated. With these ideas, you are equipped to make a sound decision regarding your next auto loan. Good luck!
