Posted in Loan Type, Type of Loan, Vehicle Loans

Unsecured Vehicle Loans

Unsecured Vehicle Loans in New Zealand

Unsecured Vehicle Loans

When shopping for a car loan, it is good to do in-depth research on different products and offers in the market. Doing prior research enables you to make sound and informed decisions. Unlike secured vehicle loans, unsecured vehicle loans in New Zealand are not easy to acquire, but they are available.
An unsecured vehicle loan is a form of car loan that is not backed by any assets as collateral. The Lender gives the loan based on the borrower’s credit history, and ability to repay the loan.

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Features Of Unsecured Vehicle Loans:

  • No collateral needed.

  • Lower borrowing limits.

  • High-interest rates.

  • Hard to obtain.

  • Mostly short loan term.

  • Might need a guarantor.

  • Mostly fixed interest rates.

Requirements For Acquiring Unsecured Vehicle Loans

  • Applicant must be 18 years and above.

  • Should have a stable income and reasonable assets.

  • Must be a New Zealand resident

  • Should hold a valid driver’s license; either restricted or full.

How is the vehicle loan calculated?

Process Of Acquiring Unsecured Vehicle Loans In New Zealand

Unsecured Vehicle Loans In New Zealand

Visit your preferred lender and fill out the application form. The lender will require your credit report, payment stubs for the past few months, identification document, e.g., passport, physical address, contact details, etc. these will determine your eligibility for unsecured vehicle loans.

Due to the high risk involved, the lender has to do a lot of research on your financial situation before making a decision. If they are satisfied, they will then approve your loan application.
Upon approval, the lender will deposit the money to your account.
After the cash receipt, you will visit the dealer of your choice and make the purchase. Having the cash at hand will enable you to negotiate for the best deal possible.

Advantages Of Unsecured Vehicle Loans In New Zealand

  • In case you default, the lender cannot repossess your vehicle. The only way the lender gets hold of the car is through the court which can take months before they can regain their ownership.

  • With an excellent credit score, you can negotiate for low interest.

  • You can pick any vehicle you want without restrictions.

  • Some lenders offer re-draw facilities; this is where you pay more than you are supposed to, but in case of an emergency, the lender gives you the extra cash (surplus).

  • You get to decide on the type of insurance to take for the vehicle; this might save you money.

  • The fixed interest rate enables the borrower to plan funds as there are no uncertainties on the repayment amounts.

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Disadvantage of vehicle loans

Disadvantages Of Unsecured Vehicle Loans.

  • Approval is unpredictable due to the risk involved.

  • The lender charges high-interest rates due to the high risk involved.

  • With a low credit score, it’s almost impossible to get an unsecured vehicle loan

    Defaulting can tint your credit report which can be hard to obtain any credit in future.

  • Some lenders have penalties for an early exit. It is good to know your lender’s terms on early repayment to avoid such extra charges.

  • Lenders limit borrowing amount; which might not be enough to buy the vehicle you want.

When to choose unsecured vehicle loan

If your credit score is excellent: having a high credit score gives you an upper hand to negotiate for lower interest rates. Probably same as the rate for a secured vehicle loan. So you would have nothing to lose.
If you want freedom of choice: unlike the secured car loans which are restrictive on the car model, age, and mileage, unsecured vehicle loans give you the freedom to purchase any vehicle of your choice.
When you want a fast and uncomplicated process: the steps and paperwork for this loan are few. The lender will process your credit faster and disburse the money to your account even before you fully decide on the car you are buying.
When you want to reduce the chances of losing your vehicle: in case your financial status hits the rocks due to a sudden job loss or medical situation, the lender cannot take the car.
Depending on your financial obligations and capability, unsecured vehicle loans can be a great choice. However, you will end up paying a lot of money as interest due to the high rates charged.

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