A second hand car can be quite expensive and it is often the case that a person does not have the cash available to be able to get a second hand car easily.  This will mean that they will have to borrow the money to do this.  There are a number of options when borrowing to pay for a car.

One of the most common ways of borrowing to buy a car is the chattel mortgage.  This is a mortgage that is based on a moveable piece of property that is not tied to a piece of land, such as a car.  If the payments on the chattel mortgage are not kept up then the lender is perfectly able to repossess the car and sell it on to try to make any money back on the loan.  If there is any money left outstanding then the borrower will still have to pay it back.

This means that lenders are far more prepared to extend a chattel mortgage than they are to extend an unsecured loan to buy a second hand car.  This in turn means that the interest rates that are charged on the loan are lower, that the amount that the company is prepared to loan is higher and that the terms on the loan can be longer, which can mean that there are lower repayments per month. 

Chattel mortgages are often only available for cars that are three years old or less. This will mean that cars that are older than this will not be able to be bought with chattel mortgages.

There are two ways in which a car that is more than three years old can be bought, through an unsecured loan and through extending a home loan.  An unsecured loan is a loan that is only secured on the borrower’s reputation.  These loans tend to be smaller than secured loans and tend to have higher interest rates.  They may also be harder to obtain at all.

Extending a home loan can be quite easy, but is not always recommended.  As the home loan is secured against the house then the interest rate tends to be very low.  However this can mean that if the car payments are not made then the house will be repossessed. 

It can often be a good idea to get pre-approval for a car loan.  This means that a car dealer will be more prepared to accept a lower offer on a car with a buyer who can complete.