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Auto Secured Loan Tied Directly To Title
By Myles Johnstone

Since cars are usually the second largest asset people will acquire during their lifetime, an auto secured loan is typically how they buy one. This type of loan is called a secured loan simply because the amount you are borrowing to purchase the vehicle is secured by the title of the vehicle. That is the title may be in your name, depending on the source of your auto secured loan, but the lender is listed as a lien holder on the title and cannot be sold while you still owe money on the loan.

Your credit history will determine not just the interest rate you will be charged on the loan but also how much security the lender will want before you get the car. For example, a person with a perfect credit history may be able to obtain an auto secured loan for the price of the vehicle, and the lender will not consider the depreciation on the vehicle once you drive it off the lot.

A person with less than stellar credit, but still not bad, will usually have to provide a down payment to reduce the amount of the auto secured loan to an level that will be lower than what the car will be worth when it leaves the lot, typically about 70 or 80 percent of the value.

Lenders Protecting Their Financial Interests

Should a borrower default on an auto secured loan the lender has the right, under the law, to recoup their losses. Usually, if the vehicle is taken back by the lender after a certain amount of time, which varies from state-to-state, they can sell the vehicle and any difference between what you owe on the loan, plus reasonable expenses for recovering the vehicle, selling it and legal fees and what the vehicle sold for will be your responsibility.

Before you take out an auto secured loan you should carefully check the company with which you will be doing business. The Better Business Bureau in your area can caution you if a company has complaints concerning predatory lending practices and how well they follow the agreement they made with the customer at the start of the deal.

However, unless you are prepared to pay cash for the vehicle, there is a good chance that an auto secured loan will be how you purchase a vehicle. Caution is advised to make sure the lending company is legitimate and ethical in its dealings.

About the Author
Myles Johnstone writes exclusively for finance related sites about such subjects as turnaround finance and commercial mortgages

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