When this option is a good idea and what are the benefits for the consumer Have you ever wondered what makes interest on loans – the extra amount we pay to the financial institution that lends us money – be so high? According to a survey released by the Cream Bank in 2019, the main component that influences this to happen is default. That is, the high rate of non-payment of debts.
The survey showed that the rates for unsecured loans are approximately double that of loans with guarantees.
This type of guarantee is a loan in which the person who borrows the money but places some good of value to reassure the financial institution that if they do not pay, they can keep that item of their value.
Among the options of this type of loan, is that you can give a car, a motorbike or a truck of yours as a guarantee, it is the so-called vehicle guarantee loan.
How it works?
A lot of people know it as vehicle refinancing. In this modality you leave your vehicle in fiduciary alienation, which is the process that allows this type of asset to be used as collateral when contracting a loan.
What does that mean? That his sale is impossible until the debt is paid off.
Makes sense, doesn’t it? If I am giving a good of mine as a guarantee and receiving benefits for it, I cannot dispose of it until I finish this payment.
But rest assured, you are still the owner of the vehicle, it does not pass to the financial institution except in case of default provided for in the contract.
The amount of credit you will receive can vary between 50% and 90% of the vehicle’s value, that is, the newer it is, the more attractive the interest rate offered by the institution will be.
That is why the vehicle undergoes an analysis to check its condition. Some institutions, for example, do not accept cars over 15 years old. This may be one of the restrictions on this type of loan.
This type of loan manages to have the best interest rate conditions precisely because the rate of non-payment of that debt will be low, since the financial institution is more secure with the guarantee of your vehicle.
On the Good Lenders Credit platform, for example, you can compare this type of loan at more than 30 financial institutions.
The rate options start at 1.9% per month and you leave with the best option for your pocket.
When is it a good option?
A secured loan is your chance to exchange an expensive debt for a cheaper and more stable one.
Expensive debts are those with the highest interest rates on the market, such as overdraft or revolving credit card (when you pay only the minimum of the card and fall into the trap of having to bear interest on top of interest).
It is as if you are going to “refinance your debt”. Get out, get the cheapest. You transform everything into one and you have the possibility of financial recovery.
With that breath, you can finally put your planning into practice and get out of the red instead.
How do I place my vehicle as a loan guarantee?
You can do a simulation, go to the page of this type of loan here at Good Lenders Credit and make yours. This process can be completely virtual, with your registration and data analysis.
The next step is to check the vehicle to find out which credit limit will be released and which payment terms.
Can I have a dirty name?
This is one of the advantages of the secured loan. As much as an analysis of your data as a payer is made, this information is not decisive for you to receive or not the money.
Even those who have any outstanding debt or name restrictions can try.
Being in default is not an impediment to getting this credit, but, of course, know that with a clean CPF and a good score on your positive record showing that you pay your bills on time are welcome reinforcements to get much larger credits.
How does the confiscation of good work?
No you need to be afraid of losing your vehicle, as we have already said, this will only happen if your debt is not paid, and even then, this is only triggered as a last resort.
It is not because you have not paid a portion of the loan that the financial institution will confiscate your car.
This can vary from one location to another, but in general the customer is considered to be in default from the third installment without paying.
Even so, this decision is not immediate, the institution can still contact you to negotiate the debt and find a form of payment that is interesting for both parties. Only as a last resort is a vehicle taken.
Pay special attention to financial health and get out of the red, the terms of the secured vehicle loan may be the best option for you.