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As with personal loans, vehicle finance is either secured or unsecured. A secured car loan is where the lender takes security of the vehicle being financed. Also known as a charge or lien, having security over a vehicle allows the lender to repossess the vehicle if loan repayments are not made and the account is in default. The vehicle would then be sold to help the lender regain part or all the remaining loan amount due, plus any outstanding fees and charges. Where the lender is unable to recover all outstanding amounts due, the borrower is still responsible for repaying any remaining balance to the lender. Secured car loans usually carry more favourable terms, such as lower interest rates, as a borrower is less likely to go into default on their loan when they risk losing their vehicle.

An unsecured loan is where the lender does not take any security against the loan made to the borrower. With an unsecured loan, the lender has no ability to repossess the vehicle if loan repayments are not made and the account is in default. However, the borrower is still responsible for repaying any remaining balance due to the lender. Unsecured car loans usually carry less favourable terms, such as higher interest rates and reduced maximum loan amounts, as the lender does not have the ability to repossess and sell a vehicle held as security to recover any losses.

There are major advantages to obtaining a car loan through a broker. It should be noted car dealerships can make as much money when they finance your vehicle as they do when they sell you the vehicle, sometimes more! Even fewer people are aware that car dealerships have operated under an exemption from following the National Consumer Credit Protection (NCCP) Act 2009 when offering finance to their customers. The NCCP Act is there to protect consumers when it comes to obtaining credit, and dealerships operate under a loophole known as the Point of Sale (POS) exemption. In contrast, when you see a broker for your car finance you fall under the protection of the NCCP legislation.