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Do You Have The Right Loan for a 2018 Nissan Maxima?
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(Posted on Aug 13, 2018 at 04:55AM by Patrick Wensink)

Hello Patrick,

Iâ€™m all set to buy a new Nissan Maxima, but financing is making my head spin. Can you explain the difference between secured and unsecured auto loans?

-Scott

Hi Scott,

Thanks for reaching out for such an important decision. I have good news for you: the difference is pretty basic. It essentially boils down to what happens if you fail to pay.

First, letâ€™s discuss a secured loan. What this means is that the lender needs collateral in order to fund the purchase. Usually, there is a lien put on the vehicle being purchased, but sometimes another car or a house can be used instead. Regardless, the borrower will get that item repossessed if they cannot adhere to the schedule.

An unsecured one, on the other hand, does not require any assets be put up against the value of the money lent. If payments are not made, legal action is the only way for the lender to recoup their loss. This type tends to have a higher cost and interest rate, due to the added risk on the bankâ€™s side.

As long as the bills get paid on time, it comes down to what is the best fit.

Let me know if there are any more problems I can research for you!