niquelynne asked:
We are getting another car and are getting a secured loan for $5000. I’m still not sure what the point of a secured loan is. Thanks.
I don’t understand why we don’t just take the $5000 cash that we have and just buy the car. If you have a secured loan, do you have to get full covereage on your vehicle?
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We are getting another car and are getting a secured loan for $5000. I’m still not sure what the point of a secured loan is. Thanks.
I don’t understand why we don’t just take the $5000 cash that we have and just buy the car. If you have a secured loan, do you have to get full covereage on your vehicle?
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Did you make a secured loan on a car?
Did you put $5,000 down to get a $5,000 car?
Why not just buy the car for cash.
Go to your bank and get a secured credit card if you want to develop credit.
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Secured means there is some personal asset that they can take if you don’t pay the loan. On a car loan, that usually means they can come tow the car away if you don’t make your payments.
Secured loans end up being much cheaper than borrowing on credit and there’s no credit check, etc. Typically the rate is just a tad higher than the underlying CD or investment is bearing. So if you have a CD earning 4%, the secured loan rate might be 6%. Earning 4% minus paying 6%, you end up with basically a 2% loan.
That beats financing at some used dealer for 12%
If you have awesome credit and you’re after a new car, you can probably get next to zero percent anyway, so in that case it would be pointless.
the point is that secured loans are meant for people with bad or no credit. The pro is you show payment history. The con is that you have to come up with the money and pay it back. it also takes longer and you pay interest.