This is a loan that can be used only for the purchase of a car. In many cases, a loan such as this will come with additional benefits. This could include discounted vehicle inspection, car parts and breakdown cover. As you don’t have to put down any collateral you are able to borrow more than the value of the car. This allows you to borrow more money to pay for insurance or other additional costs that may be incurred.

Interest Rates: Every lender has different interest rates so make sure to read the fine print. Additional Fees: You may be required to pay additional fees which could include an application fee or a prepayment fee. These could easily add up so make sure to look for a lender who has minimal fees. Legal Action: If you default on your loan the lender can take you to court.

Collateral: You don’t need to put up any collateral for the loan which can help to speed up the process. Defaulting: As the loan is unsecured even if you defaulted on your payments you would still retain the car. Flexible: With an unsecured car loan you have the ability to negotiate the terms and conditions with the lender. Low interest for low credit score: If you have a good credit score you may be eligible for low-interest rates. No restrictions for certain types of vehicle: This means you can choose exactly which car you want.

High-Interest rates: As they represent more risk to the lender, interest rates on unsecured car loans are usually higher. Amount: As the risk is so much higher, you may only be able to borrow a small amount.