A secured Car Loan is similar to other secured loans such as Homeowner Loans and Second Charge Loans where the loan is secured against an asset of yours. In the case of a Car Loan, however, that asset is your car rather than your home. You must have equity in your car in order to use it as collateral for a secured loan. This means that you must either own the car outright or own at least a portion of, in order to have something for the loan to be secured against.

How does a Car Loan Work?

As when calculating for a loan where one’s home is the collateral, the value of your car must first be decided. The valuation will be undertaken by a professional independent of the lender in order to ensure a fair outcome. The higher the value of your car (supposing you do not have a massive loan taken out on it already), the larger the equity in the vehicle.

Lenders will usually offer loan amounts in keeping with the amount of equity in your asset. Because the equity acts as a ‘money-pot’ from which they can draw if the borrower were to miss their payments, the loan given cannot exceed the amount of equity in the asset.

  • Repay your debts

  • Borrow even with a poor credit rating 

  • Competitive interest rates 

  • Borrow up to £25,000+ on your car with Secured Loans

Secured Car Loans, like other secured loans, typically have lower interest rates than loans that are unsecured.

Most lenders will allow you to choose the length of repayment for the loan; this period is usually referred to as the loan “term.” There is usually a maximum term, but this could be a long as 15 years with a secured Car Loan. It is important to note that the longer you take to repay the debt, the more the loan will cost you as interest is charged each year.

Can I Still Use My Car After Taking Out a Car Loan?

Yes – the car stays in your possession and you are able to use it as normal. The only difference is that the lender, depending on the percentage of car’s equity they have lent to you, technically owns a portion of the vehicle. Until the equity in your car is at 100%, it does not fully belong to you. In the same way that you continue to live in a home which has a mortgage against it, you continue to use a car you have loaned money against.

The only instance in which you will not be able to use your car is if you default and your car has to be repossessed. If you start missing repayments on a secured Car Loan, you will be putting the car at risk for repossession. Usually, however, vehicle repossession is a last resort for the lender.

You may be eligible for a Car Loan if you:

  • are over 18 years old

  • have a steady income – are able to make monthly payments

  • own a car or have equity in your car to use as collateral

Car Loans are a quick and easy way to borrow money for whatever reason. The amount you are able to borrow with a Car Loan depends upon the value of your car and the amount of equity in it. If you have a car and are looking for a low-interest solution to a financial need, a Car Loan may well be the answer to your monetary needs.


Contact us for more information on Car Loans and how they can help you.


Your home may be repossessed if you fail to keep up with your repayments.