A secured motor vehicle loan uses the purchased vehicle as collateral to enable borrowers to receive lower interest rates.

When you choose a secured loan for a motor vehicle purchase, the purchased vehicle is used as security on the borrowed amount — in the event that you are unable to repay the loan, the lender can take ownership of the vehicle.

Yes. While it may seem risky to use the purchased vehicle to secure the loan, lenders will only have a claim on it if you become unable to make the agreed repayments. It’s important to understand that lenders would rather have the loan amount repaid than to take ownership of the vehicle.

As long as you have done your due diligence in ensuring that you have the finances to keep up with the regular repayments, there is no real risk of having your vehicle repossessed. Legally, the vehicle will remain in your possession even though it is used as collateral for a secured loan. It’s important to work with a broker to ensure that you are a candidate for a secured loan.

How much can be borrowed under a secured motor vehicle loan?

It depends on your specific financial circumstances such as your savings, income, and credit history, as well as the condition and value of the vehicle intended for purchase and security.

Some lenders may be willing to lend as much as 100% of the vehicle's purchase price, although the latter is normally more applicable in the case of new cars. If you want to calculate how much you can borrow with a secured motor vehicle loan, it's best to start by first determining what type of vehicle you will want to purchase. You can then take these details to various lenders and ask them for quotes, or work with a trusted loan broker to conduct the search for you.

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