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A secured loan is a loan backed by collateral. The most common types of secured loans are mortgages and car loans, and in the case of these loans, the collateral is your home or car.
Documentation requirements can vary across lenders and dealers, so you may want to ask them what you should bring when you're ready to finance. Proof of identity. ... Proof of income. ... Credit and financial history. ... Proof of residence. ... Vehicle information. ... Current vehicle registration. ... Proof of insurance. ... Down payment.
If there's a will, the heir or heirs might inherit the loan along with the vehicle. State law varies, and so do loan terms, but the surviving co-signer on the car loan or the borrower's estate is usually responsible for the remaining balance.
A secured loan can be a good idea if you: Have a true need for the loan: This means it helps you meet other financial goals and is not merely a means to build credit.
In simple terms, a secured car loan is a loan that uses collateral ? typically the car itself ? as security. This means that the car ? or whatever you signed up as collateral ? can be repossessed by the lender if you stop making payments on the vehicle.
Secured loans are business or personal loans that require some type of collateral as a condition of borrowing. A bank or lender can request collateral for large loans for which the money is being used to purchase a specific asset or in cases where your credit scores aren't sufficient to qualify for an unsecured loan.
An auto loan agreement is a contract used to secure a loan by a buyer of a motor vehicle. The agreement establishes the names of the borrower and lender, the amount ($) that was borrowed, the length of the loan, how much the borrower needs to pay on a monthly basis, and other important terms.
An unsecured loan means you're borrowing money for a specific purpose and you're able to get approved because of your ?credit-worthiness?. It's different from a secured loan since the lender does not have rights to an asset (like a car or house).