Types of Auto Finance

Published by David | March 3, 2012 | |

Essentially, there are two broad types of financing that can be used in a situation where you want to purchase something that you cannot afford to pay for all at once. These two loan types are secured loans and unsecured loans.

Secured Loans: A secured loan is the type of loan where there is some form of security or collateral involved. These loans are by far the most common types of loans in the world. Imagine a situation where you own a car and would like to purchase a new sports bike. If your car is in good condition and its current value either matches or exceeds the loan amount, you can use the car as the collateral to secure your loan. This means that the lending institution will provide you with a loan on the basis of the ownership of a pre-determined object of value, in this case, your car. In an unfortunate situation where you default or are unable to pay back the loan, the lending institution will gain ownership of the car or any other pre-determined security or collateral.

Unsecured Loans: An unsecured loan is also often referred to as a personal loan.

In this type of loan, there is usually no collateral or security involved. In this situation, the lending institution will provide you with a loan on basis of your credit history. One way to think about personal loans is like a loan between two friends. In this case, the collateral is normally given a waiver in lieu of good faith.

While obtaining a secured loan from a bank is hard enough, obtaining a personal loan is close to impossible. However, this is where Westralian Auto Finance comes into the picture. Westralian Auto Finance is a company that helps people in getting car finance in Perth and works outside the traditional lending system of banks. It is committed to helping anyone and everyone gain access to both secured as well as unsecured loans. Westralian Auto Finance will work with you to make it possible to buy your dream car, bike, boat, or work equipment today. To find out more, visit our web-site at http://waf.com.au

Source: http://www.1directory.net/finance/types-of-auto-finance-13555.html

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