What Is an Unsecured Car Loan?

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Are you thinking of buying a new vehicle, but are wondering, “Is a car loan unsecured or secured?” You can find both types of loans available for vehicles. Learn about the differences between secured and unsecured car loans? Unlike secured loans, unsecured auto loans are basically loans in which the vehicle isn’t considered as collateral. Check out some comparisons below to learn more about unsecured loans, or speak directly to one of our experts at Bell Road Mitsubishi in Phoenix. We have a team of professionals on standby near Glendale to help you make the right decision for you and your finances. 

The Difference Between Secured and Unsecured Car Loans

There are a few key differences between secured and unsecured car loans. With secured loans, the vehicle is considered as collateral, meaning the lender has the right to reclaim the vehicle if the borrower is unable to continue paying off the loan. For unsecured loans, a lender may require a co-signer, someone who is able to make payments if the borrower cannot. Here are a few important differences between the two: 

Unsecured Auto Loans

  • Are generally shorter term loans
  • Can have fixed or variable rates
  • May require a co-signer
  • Can be harder to qualify for

Secured Auto Loans

  • Come with loan terms over longer period
  • Have fixed interest rates
  • Are easier to qualify for with low or no credit

So, is a car loan unsecured or secured? Although most car loans are secured, it’s important to know whether your loan is secured or unsecured. This will determine factors like your interest rate, length of loan, and what it takes to qualify for a loan. 

Secured vs. Unsecured Loans: Determine Which Is Best for You 

Whether you’re looking to finance a used vehicle near Peoria or drive a brand new car off the lot, it’s important to understand which kind of loan is best for your personal financial situation. There are clear advantages to both. If having a short-term plan is important to you, and missing payments isn’t a concern, then an unsecured loan might appeal to you. But if you’re looking for a fixed rate over a longer repayment period, a secured loan might be the way to go. 

Learn More About Financing Near Peoria

Make sure you’re financially prepared for your next car loan. At Bell Road Mitsubishi, we’re here to help you each step of the way. Contact our finance center to learn ways to improve your credit and find the right loan for you. Or get pre-approved today to receive a loan for your next vehicle.

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