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  • What is the difference between secured and unsecured car loans? Here are some points to consider when borrowing.

    What is the difference between secured and unsecured car loans? Here are some points to consider when borrowing.

    Many people take out loans when they need a large sum of money for a big purchase like buying a house or for their children’s education. Cars are no exception, and it is common to see people take out loans to purchase them.

     

    There are several types of loans that can be used to purchase a car, each with different uses and benefits. When taking out a loan, it is important to choose the one that suits you.

     

    There are also loans that can be used by providing collateral. In this article, we will introduce the types of loans, as well as explain loan collateral and interest rates. If you check in advance when taking out a loan to purchase a car, you will be able to make a reasonable repayment plan.

    table of contents

    1. Do I need to provide collateral for a car loan?

    2. Difference between secured and unsecured car loans

    3. Features of secured car loans

    4. When taking out a car loan, check the interest rate in addition to the collateral.

    5. Points to consider when choosing a car loan other than collateral [Interest rate types]

    6. Points to consider when choosing a car loan other than collateral [Repayment method]

    7. Buying a low-priced used car can reduce your repayment burden!

    8. Summary

    Do I need to provide collateral for a car loan?

    A loan means “to lend something.” From the perspective of the loan user, it means “borrowing,” and it is a system in which you borrow the cost of a product that you cannot pay for all at once, and then repay it little by little later. There are many types of loans, and you must pass an examination to use them. Also, applying for one takes some effort.

     

    Many people may be wondering whether they need collateral to use these loans. First, we will explain the types of loans you can apply for when purchasing a car and whether or not you need collateral.

     

    There are several types of car loans

    There are mainly bank loans and dealer loans for car loans, and they can be used when purchasing a car, whether it is a new or used car. As the name suggests, bank loans are provided by financial institutions such as banks and credit unions. Dealer loans are applied for at the dealer, but unlike bank loans, the loan is provided by the guarantee company or credit card company that the dealer has an agreement with.

     

    There are also other services such as free loans and card loans that do not limit the purpose of use, and many people use these types of loans when purchasing a car.

     

    The availability of collateral varies depending on the type of loan.

    Collateral is something other than cash that is given to the borrower in case the borrower cannot repay the money. Typical collateral would be a car, a house, land, or securities.

     

    For example, when buying a car on loan, you borrow money and use the car as collateral to repay the loan. Some loans require collateral like this, and loans that do not require collateral are called “secured loans” and “unsecured loans.”

    The difference between secured and unsecured car loans

    A loan that requires collateral is called a secured loan, whereas a loan that does not require collateral and can be borrowed freely is called an unsecured loan.

     

    The difference between the two is whether or not you may need collateral. From here, let’s take a look at how secured and unsecured loans work, and how they differ from personal car leasing.

     

    What is a secured loan?

    Typical examples of secured loans are car loans and real estate loans. Since you need to set up collateral, you need to continue making repayments smoothly, but it is possible to receive a large loan at a low interest rate.

     

    The screening process for secured loans is strict, and not only will they check whether you can repay the loan, but they will also check whether the items you have set as collateral are valuable enough to be used as collateral. It will take some time to go through the screening process and get the loan, so it will be difficult to borrow money right away.

     

    You cannot use a secured loan if you are in a situation where you “lack the ability to repay” or “cannot provide collateral.”

     

    What is an unsecured loan?

    An unsecured loan is a loan that allows you to borrow money without providing collateral. Even if the borrower falls behind on repayments, there is no obligation to provide the collateral that has been set up because there is no collateral. Another feature of unsecured loans is that, unlike secured loans, the screening process is quick.

     

    Unsecured loans have the advantage of not requiring collateral and quick approval. On the other hand, interest rates are often set higher and the amount of money you can borrow tends to be less than that of secured loans.

     

    Also, because there is no collateral, the lender is more likely to take risks in terms of repayment ability and creditworthiness, and it can be said that the borrower is borrowing money using their “credit” as collateral.

     

    Different from leasing

    In recent years, a service called “My Car Leaseback” has become more common. My Car Leaseback is a system where you sell your car and transfer the ownership of the sold car to a leasing company. Even after the ownership is transferred to the leasing company, you can continue to use the car as your own.

     

    The difference between a loan that requires collateral and a car leaseback is whether you are borrowing money or a car itself. With a car leaseback, you sign a lease agreement with a leasing company after selling your car, and then borrow the car from the dealer.

     

    In the case of secured and unsecured loans, since money is borrowed from a financial institution, their nature is very different.

    Features of secured car loans

    In addition to cars, secured loans also include home loans and real estate secured loans. Many people use home loans to purchase their own home, so they are well known. Secured loans can also be used when purchasing a car, but what are their advantages?

     

    Here we will discuss the advantages and disadvantages of secured loans.

     

    Benefits of secured loans

    Secured loans are characterized by lower interest rates than unsecured loans because they require collateral, which means the burden of repaying the loan will be reduced.

     

    In addition, the loan amounts tend to be larger. The amount of the loan depends on the value of the collateral. If you want to borrow a large amount, you can increase the loan amount by providing collateral with a higher value.

     

    Another advantage of secured loans is that the loan amounts are large, allowing for ample repayment time over a long period of time.

     

    Disadvantages of secured loans

    The biggest disadvantage of a secured loan is that you need to provide collateral if you are unable to repay the loan. Therefore, you need to fully understand the collateral and repayment process before taking out a loan.

     

    In addition, secured loans generally have limited uses, so you cannot use the loaned money for any purpose other than what you reported when taking out the loan.

     

    In addition, the screening process for secured loans takes some time as the collateral needs to be verified, so be sure to apply early.

    When taking out a car loan, check the interest rate in addition to the collateral.

    When taking out a car loan, you should not only check whether or not you have collateral, but also check the interest rate. Interest rates vary not only depending on the type of loan, but also depending on the financial institution. If you use a loan with a low interest rate, you can reduce your overall repayment amount.

     

    Here we have compiled information about interest rates. Be sure to check in advance as it will affect the total amount you pay.

     

    The total payment amount varies depending on the interest rate

    When taking out a loan, the amount you pay on top of the amount borrowed is called interest.

     

    Interest is accrued on the amount borrowed, so if you borrow 1 million yen, the interest or interest that accrues over one year on that amount is 48,000 yen. In that case, the interest rate is calculated as 4.8% per year.

     

    The interest rates charged for secured and unsecured loans are different, and the total amount paid varies depending on the interest rate difference. Secured loans are often offered at lower interest rates than unsecured loans because they have collateral.

     

    Car loans tend to have lower interest rates

    Loans with a set purpose for which the loan is used are set with relatively low interest rates. Examples of loans with a set purpose include car loans and home loans. On the other hand, open loans with no restrictions on how the loan is used often have higher interest rates.

     

    While free loans offer a high degree of freedom, they also have low credit limits and cannot make a profit unless they raise interest rates. When there are restrictions on how the loan can be used, such as with car loans, the repayment period is often long and the amount borrowed is relatively high, so it is possible to make a profit even if the interest rate is set low.

    Points to consider when choosing a car loan other than collateral [Interest rate types]

    Loans always come with an interest rate, but the type of interest rate you should particularly understand is the difference between fixed and variable interest rates. Make sure you understand the characteristics of these two types and choose a loan with an interest rate that suits you.

     

    Easy to calculate fixed interest rate

    A fixed interest rate is a loan in which the interest rate remains the same until the end of the loan contract. There are also two types of fixed interest rates: a “fixed interest rate selection type” in which the interest rate can be re-fixed during the loan period, and a “fixed interest rate for the entire term” type in which the interest rate remains the same until the loan is paid off.

     

    With a fixed interest rate, the interest rate is fixed, so the repayment amount will not change even if the market interest rate falls. The advantage is that the interest rate is fixed, so the repayment amount is decided at the time of borrowing, making it easier to make a repayment plan. You will also have the peace of mind that the interest rate is fixed.

     

    If you want to make steady repayments over a set period of time, we recommend the “fixed interest rate option.” If you want to make steady repayments until the end, we recommend the “fixed interest rate for the entire term.”

     

    Variable interest rates are being reviewed

    With a variable interest rate, the interest rate changes every six months and the repayment amount is reviewed every five years. Because the interest rate changes, it is not suitable for long-term repayment, but because the interest rate itself is set low, the repayment amount tends to be reduced.

     

    The advantage of a variable interest rate is that when market interest rates fall, the amount you have to repay also decreases. Naturally, there is also the risk that market interest rates will rise, so for those who do not want to repay over the long term, but would like to take advantage of the benefits that only low interest rates can provide, a variable interest rate is suitable.

    Other points to consider when choosing a car loan besides collateral [Repayment method]

    In addition to interest rates such as fixed and variable interest rates, loans also have what is called a repayment method. There are two repayment methods: “equal principal and interest repayment” and “equal principal repayment.” The monthly repayment amount and total repayment amount change depending on the difference between these. Understand the mechanisms and characteristics of each method and choose a repayment plan that is affordable for you.

     

    Equal principal and interest repayments with a fixed amount

    The characteristic of equal principal and interest repayment is that the monthly repayment amount is fixed, and the principal and interest of the repayment amount are adjusted. Since the monthly repayment amount is fixed, it is easy to plan repayments and predict income and expenditures. Another advantage is that the repayment amount at the beginning of repayment is smaller than that of equal principal repayment.

     

    Many people choose equal principal and interest repayments for car loans because they are easier to repay. However, be aware that there is also the disadvantage that the rate at which the principal is reduced is slower, so interest increases and the final repayment amount becomes higher.

     

    Equal principal repayments with variable monthly amounts

    Equal principal repayment is a repayment method in which the principal remains constant and the monthly repayment amount is set by dividing the principal by the remaining repayment period. The advantage is that the principal is reduced quickly and the total repayment amount can be reduced. However, the disadvantage is that the interest rate is high at the beginning of repayment, so the initial repayment burden is large.

    A cheap used car can help reduce your repayment burden!

    Many people use a loan when buying a new car. A loan is one of the necessary means to buy a car, but it comes with the obligation to make monthly payments. If you want to reduce the cost of buying a car, consider a used car, which is cheaper than a new car.

     

    Used cars can help ease the burden of repayment. Nextage, which has stores nationwide, thoroughly researches the prices of other companies every day and offers great deals on used cars 365 days a year with unbeatable prices.

     

    In addition, we do not sell cars that have been repaired. In addition to thorough quality control, we also carry out quality appraisals by neutral third-party organizations, so you can enjoy a worry-free car life even after purchasing.

     

    If you buy a used car, you may be able to buy a high-grade car at a low price.

    The first benefit of buying a used car is the low price. Even a relatively new used car, such as one year old, can be purchased for about 20% less than the price of a new car. Also, there is a wide variety of used car models available, so it is not difficult to find a used car within your budget.

     

    In addition, the delivery period for used cars is short, and if there are no problems with the procedures, the car will be delivered in about 1 to 2 weeks. Since the delivery of new cars often takes more than a month, purchasing a used car is also recommended for those who want to get a car quickly.

     

    Nextage, which has a large number of units sold, offers a wide range of options

    Nextage’s strength is its large inventory. Nextage has over 200 stores nationwide, with a total inventory of approximately 30,000 vehicles. If you find a car you are interested in on the Nextage website, you can have it delivered to the nearest store, even if the store is far from your home and has the car in stock.

     

    In addition, Nextage places importance on making it easy to find and choose the car you want. They have specialized stores that specialize in car models such as compact cars and SUVs, so you will be able to find a car that meets your desired conditions.

    summary

    There are several types of car loans, including bank loans, dealership loans, card loans, and free loans, and some loans can be used by providing collateral. A secured loan requires you to prepare collateral, while an unsecured loan does not. Understand the different aspects such as the screening period, interest rate, and loan amount, and find the loan that suits you.

     

    One way to reduce the burden of loan repayments is to purchase a used car. Not only are used cars cheaper than new cars, but you may also be able to purchase a higher-grade car. When purchasing a used car, please contact Nextage, which has a wide inventory.

     

  • Are online bank car loans attractive? What to consider when choosing and how to apply

    Are online bank car loans attractive? What to consider when choosing and how to apply

    A car is an expensive purchase, so many people consider buying it on a loan. There are various types of loans, such as bank loans and dealer loans, but there is also the option of online bank car loans.

     

    In this article, we will explain the appeal of online banks, how to organize the process from the preliminary screening to the formal screening, and tips on choosing a loan. We will also introduce recommended websites for finding a car for those who are taking out a car loan online, so please use this as a reference.

    table of contents

    1. Here’s what’s great about online bank car loans

    2. How to get a car loan from an online bank [in the case of a preliminary screening]

    3. How to get a car loan from an online bank [in the case of formal screening]

    4. Tips for choosing an online bank car loan

    5. Leave your online car search to Nextage!

    6. Summary

    Here’s what’s great about online bank car loans

    First of all, compared to regular bank-based car loans or dealer-based car loans, online bank car loans have their own unique advantages.

     

    So, let’s take a look at the benefits and features of online bank car loans.

     

    It’s easy to pass the examination

    Even if you are interested in using traditional bank-affiliated car loans because of their low interest rates, the screening criteria are stricter, so the number of people who can use them tends to be limited.

     

    However, with online bank car loans, you can apply even if you are a part-timer or casual worker, as long as your income is stable. Conventional bank car loans state “full-time employee” in the terms of use column, so in this respect, online banks have an advantage over general bank car loans in terms of ease of use.

     

    The fees are low and it’s a good deal

    If you use a car loan from a dealer as mentioned above, not only will the owner become the “dealer” or “credit company,” but interest rates and fees tend to be higher.

     

    Therefore, if you want to keep the fees and maintenance costs associated with car loans low, we recommend car loans from online banks, which have no or low fees. Regular bank car loans incur labor costs and store maintenance costs, but online banks, which do not have physical stores, do not incur any of these costs.

     

    Easy procedure without visiting the store

    Compared to car loans from dealerships that can be used after choosing a car model, general bank car loans are convenient to use at any time. However, since you need to go during the opening hours of the counter, it may be difficult to use them as you wish.

     

    On the other hand, the biggest advantage of online bank car loans is that not only do you not have to go to a branch, but you can apply at any time of the year. The process can be completed by mail and online, making it easy to use even for busy people.

    How to get a car loan from an online bank [in the case of provisional screening]

    Some people may be interested in applying for a car loan from an online bank because of the advantages of “it’s easy to pass the screening,” “fees are low,” and “you don’t have to visit a branch and can use it anytime.” The screening process consists of two stages: a provisional screening and a formal screening.

     

    Here we will explain the preliminary screening process when taking out a car loan from an online bank.

     

    Apply for a provisional examination

    When you go to the online bank’s car loan page from each bank’s personal car loan page, there is a button that says “Apply for preliminary screening,” so fill in the necessary information accurately on the next page.

     

    At the stage of provisional screening, not only is it free and no documents are required, but it can also be used even before deciding on a car, but in some cases, an annual income of 1.5 million yen or more may be required. However, the terms of use vary depending on the online bank, so it is a good idea to check in advance.

     

    Receive the results of the provisional screening

    The results of the preliminary screening may take 3 to 5 days, or may arrive within a few hours to 2 business days. Notifications tend to arrive by email, phone, or mail, but in some cases you can check the results by logging in to your My Page, so try using this.

     

    Also, in case you need to cancel the loan because the approved amount at the time of the provisional screening is less than the amount you wish to pay, it is a good idea to check whether cancellation is possible. There may also be an expiration date for the provisional screening, so be sure to read the notes of the lender.

    How to get a car loan through an online bank [in the case of formal screening]

    It may take about two weeks from the preliminary screening to the loan, so if you get the preliminary screening early, you can shorten the time until you can use the loan. However, in addition to submitting the necessary documents, the formal screening also involves receiving the results of the formal screening and the procedures that follow.

     

    Here we will explain the formal screening process when applying for a car loan from an online bank.

     

    Submit the required documents

    After passing the provisional screening, prepare the necessary documents before the formal screening. For example, prepare your driver’s license or other identification documents, previous year’s income certificate such as tax withholding slip or official certificate, health insurance card, and the estimate and contract for the car you want to purchase.

     

    However, the required documents may differ depending on whether you are taking out a new loan or refinancing an existing loan, and additional documents may be required, so be sure to check the website carefully. There are also a variety of ways to submit documents, from visiting a branch to faxing or even via smartphone, so we recommend checking the website carefully.

     

    Receive the results of the formal review

    If there are no problems with the required documents, you can wait for the results of the formal screening. It depends on the online bank you use. Check the results by email, etc.

     

    However, please be aware that your employer may be contacted in the form of an “employment verification.” If you are unable to obtain this employment verification, depending on the screening process, you may not be able to receive the loan, so if you have any concerns, we recommend that you check with the dedicated customer center.

     

    Complete the procedure and get the loan

    If you pass the formal screening, you will finally move on to the contract procedure. If you can proceed online, you will need to sign the contract and register your transfer details. In some cases, you will need to enter your details three business days before the desired transfer date, so it is important to do this early.

     

    There is also a risk that the loan will be ruined if the “estimated capital amount” is mistakenly withdrawn. To ensure that you can receive the loan on the day, be sure to check the website of the online bank you are using carefully and proceed with the procedure.

    Tips for choosing an online bank car loan

    Car loans from online banks are becoming more common, but what criteria should you use when choosing one? For example, it is recommended to compare points such as whether you can save on costs such as interest rates and fees, whether there are sufficient consultation services, and whether you can repay at an ATM.

     

    Here are some tips for choosing an online bank car loan.

     

    Are the interest rates and fees high?

    Paying attention to interest rates and fees when choosing a car loan can lead to cost savings. Compared to city and regional banks, online banks often offer higher interest rates for car loans. Even if an online bank offers a low interest rate, the conditions are often strict, and the interest rate also varies depending on whether a fixed or variable interest rate is applied.

     

    In addition, one advantage of online bank car loans is that they keep administrative fees and other such fees low, but they are not completely fee-free, so it is a good idea to conduct simulations and check the details before using the service.

     

    Is there a consultation system in place?

    With a regular bank car loan, you can immediately consult at the counter if you have any questions, but with online banks, there are no physical branches, so it is important to have someone to consult with. Some online banks have multiple contact points such as email and chat in addition to phone, so if you are using a car loan for the first time, you should also pay attention to this point.

     

    Even when applying for a car loan, there are two screening processes and required documents, so it is important to choose the service you want to use based on your needs.

     

    Can I make payments at an ATM?

    Depending on which online bank you use, in most cases there are repayment methods other than direct debit from a specified account. For example, if there is an affiliated ATM nearby, repayment via ATM may be very convenient.

     

    When choosing a car loan from an online bank, if you can’t decide after comparing interest rates, fees, consultation systems, etc., it is recommended that you compare whether there are multiple repayment methods and what kind of repayments are possible.

    Leave your online car search to Nextage!

    In addition to traditional car loans from general banks and dealerships, car loans can now be completed through online banks, making them easy to use even for those who are short on time. You can also save time by searching for a car to actually take out a loan for online.

     

    Here we will explain the features of Nextage, which is recommended for searching for cars online.

     

    You can search for used cars with detailed search

    First of all, for those who think that choosing a used car is difficult because there are so many to choose from, we recommend Nextage’s detailed search function.

     

    Manufacturer

    ・Vehicle type

    ·grade

    ・Year model

    – Mileage

    ·color

     

    Specifically, you can select multiple conditions like those above. You can also specify “new car/remaining vehicle inspection date” and “price range”, and there are also plenty of functions to narrow down and sort by equipment. It also supports free word searches, so it’s recommended for those who want to easily search for used cars online.

     

    Can be picked up at your nearest store

    Nextage has over 200 stores nationwide (as of May 2022), so you can search through the inventory available nationwide and order the car model you want even if it’s not available nearby.

     

    We can order everything from compact cars to imported cars and even cars that are not listed, but there may be some vehicles that we cannot accommodate, so if you find a car that interests you, please feel free to contact us.

    summary

    The advantages of online bank car loans are that they are easy to pass the screening process, the fees are low, and above all, you don’t need to visit a branch. The preliminary and formal screening procedures vary depending on the online bank you use, so be sure to check the website of each bank.

     

    If you are also searching for a car online, we recommend using Nextage, which allows you to search for detailed inventory. In addition to the year and mileage, you can also search for cars that fit your budget by specifying the price range. There are also models that can be ordered from all over the country, so first try searching for the model you are interested in on the Nextage website.