Did you know that more and more secured lines of credit are emerging and becoming stronger in the Brazilian financial market? Yeah, and they attract different customer profiles! But are you among the people looking for a secured vehicle loan? 

Well then this article is for you! Since we have gathered here the main information you need to know to get a loan in this way. In addition, you will understand what this type of personal credit line is and how it works, and what are the best conditions it can offer.

So stay with us and check it out below!

Generally speaking, a secured loan is a personal line of credit in which financial institutions accept an asset as collateral. That is, instead of going through a more thorough credit analysis, the customer puts his asset as a guarantee that the loan will be paid in one way or another.

In this way, the customer will be selling his asset, in this case a vehicle, to the creditor financial institution. In this way, those who make this type of secured loan agreement can get the money faster and with lower interest rates. 

But it is important to remember that there are always more risks in placing an asset as collateral. Because your asset can be taken by the financial institution in case of default, and will be sold at auction to reduce the outstanding amount of your debt. But how exactly does a loan as a vehicle guarantee work?

For those who want to obtain a loan with a vehicle guarantee, they must have such an asset in their name, be it a car, motorcycle, truck or other type of car. And your vehicle will pass into the possession of the creditor financial institution.

Thus, you need to meet some prerequisites and go through a whole bureaucratic process to apply for your vehicle loan. So, how about we better understand how this type of personal credit works in practice?

Basically, the credit applicant will need to present the following personal documents and the vehicle in question:

And after gathering all this documentation for both the person and the vehicle, it is essential that you evaluate the different financial institutions that have the vehicle loan line. Because each offers different conditions for granting credit. 

So, be sure to research well and simulate your loan to see the different interest rates, terms, installments and percentage of the guarantee amount that the institution can offer you.

And when you finally find that financial institution that offers the best conditions for what you're looking for, it's time to start the process of applying for a car loan.

But to facilitate all the bureaucracy that you will have to go through when you decide to apply for a credit of this type, check out the step by step that we have created for you below!

So, keep in mind all these prerequisites and conditions for a financial institution to accept to analyze your vehicle secured loan application. And after the application is submitted, it will enter the analysis phase for the lending institution to come up with a total loan amount and interest rates. 

Then you can receive a favorable or negative opinion. If positive, the lending institution will state how much your vehicle will cover from your total loan. And this percentage may vary according to the characteristics of the vehicle.

But, after all, is it worth applying for a credit line with a vehicle guarantee? So, so that this is also clear to you, stay with us. Because we have gathered the main advantages of this type of loan, below!

One of the main advantages that a loan of this type can end up offering is an offer with better interest rate conditions and payment terms. Because with the vehicle as collateral, the real value of that asset may cover some risks for the financial institution in relation to default, default, etc.

Thus, it may be possible for someone struggling to pay a loan under normal conditions, to be able to afford the loan debt with a vehicle guarantee. 

For example, it can be a good opportunity for those with bad credit to get a loan, although it is not secured.

As we said, using the vehicle guarantee option can make the terms of your loan much more favorable to you. However, always remember to research well before signing any contract, right?

And then, the conditions of a vehicle secured loan are more advantageous because of the following conditions:

Did you just see how many good advantages? But we know that a loan agreement is not only about advantages. Therefore, better understand the possible disadvantages of this type of credit, below.

As we showed earlier, the loan with vehicle guarantee requires that the asset is paid off and registered in your name. That is, even if the vehicle in question is in your spouse's name, it will not be possible to use that asset as a guarantee on your personal credit.

Also, remember that your vehicle will get alienated to the lending financial institution. That is, you will be able to use the vehicle, but for all purposes it belongs to the financial institution that provided the credit, until you finalize your loan payment.

 And you won't be able to sell that car until you fully pay off your debt, although you can make personal use of it normally. 

Also remember that there is all the bureaucracy in the process of applying for a vehicle loan, such as:

Because, as we said, when you put your vehicle as collateral for a loan, the financial institution may not accept your vehicle. For example, some conditions need to be evaluated by the creditor institution, such as:

Thus, fulfilling these basic requirements, the vehicles that can generally be used as collateral for a loan of this type are:

So keep all of this in mind when thinking about applying for a secured vehicle loan. Because it is essential that the good that will be the guarantee respect all the prerequisites of the financial institution, otherwise your request will not pass the analysis.

The vehicle warranty is great for those who need a lower amount and better interest rate conditions. In addition, this type of loan seems to offer less risk than a line of credit that puts a property as collateral, right?

But anyway, you need to pay attention, research well the financial institutions that offer this financial product. That way, you will be sure to make a good contract with conditions according to what you need.

So, keep an eye on our list of the top financial institutions that provide secured vehicle loans. Check it out below!

How many options did you see? So evaluate well.

It is always necessary to research well the conditions of the loan before even making a proposal to the creditor financial institution. Because remember that if you default, your vehicle will be auctioned by the institution providing the credit, in addition to having a dirty name.

So, make sure that the financing installments fit your monthly budget. In other words, it is very important that you have a good idea of your personal finances before proposing a loan with vehicle guarantee, not letting the loan compromise more than 30% of your monthly income.

So, research well before making a decision. And always have a good planning of your finances before applying for any type of loan, thus avoiding acquiring risky debts, over-indebtedness or becoming negative in credit protection agencies such as Serasa and SPC.

To make it easier there are many simulators online, so take advantage and do your research and write down all the conditions, compare everything. 

So we come to the end of our article on car loan. And we hope we have cleared all your doubts about it, making it easier for you to decide whether or not to apply for this type of secured loan.