10 Ways to Get the Best Value from a Car-Backed Loan

Using an eligible vehicle as security for an asset-backed loan can provide access to capital without requiring you to sell the vehicle outright.

Release My Capital provides asset-backed lending against eligible prestige, luxury and classic vehicles. The amount available, the cost of borrowing and the terms offered will depend on the vehicle and the individual circumstances of the application.

This guide explains 10 points to consider when comparing an asset-backed loan against your car.

1. Understand How the Loan Works

An asset-backed loan allows you to borrow against the assessed value of an eligible vehicle. Your vehicle is held as security and securely stored throughout the loan, during which it is unavailable for use.

If you do not repay the loan in accordance with the agreement, the vehicle may ultimately be sold to recover the outstanding balance.

Before proceeding, make sure you understand the loan term, interest, any applicable charges and what happens if you are unable to repay.

2. Check Whether Your Vehicle Is Eligible

Eligibility will depend on the lender’s criteria and the individual vehicle.

Release My Capital considers eligible prestige, luxury and classic vehicles based on factors such as:

• ownership and existing finance;
• age and condition;
• service and ownership history;
• specification and provenance; and
• current marketability and value.

Each vehicle is assessed individually.

3. Understand Your Vehicle’s Value

The amount you may be able to borrow will depend partly on the assessed value of your vehicle.

It can be useful to review comparable vehicles through established marketplaces or obtain independent valuation information before applying. This can help you understand how the lender’s valuation compares with the wider market.

The final lending value may differ from a retail asking price because lenders consider factors including condition, liquidity and likely resale value.

4. Compare the Total Cost of Borrowing

Do not compare loans using the headline interest rate alone.

Consider the overall cost, including:

• interest;
• any arrangement or administration charges;
• storage or collection costs where applicable;
• the length of the agreement; and
• any conditions applying to early settlement.

The terms provided before entering into the agreement should explain the amounts payable and when they become due.

5. Understand the Repayment Structure

Make sure you understand when capital and interest are payable.

Some asset-backed facilities may not require monthly capital repayments, with amounts instead becoming payable when the agreement is redeemed or reaches the end of its term.

Before proceeding, confirm:

• the term of the agreement;
• when interest is payable;
• the total amount required to redeem the vehicle; and
• what options may be available if your circumstances change.

6. Ask About All Fees and Charges

Ask the lender for a clear explanation of any charges that could apply.

Depending on the agreement, these may include storage, collection or other administration-related costs.

Release My Capital explains the applicable interest and charges before an agreement is entered into so that customers can understand the cost of the facility before deciding whether to proceed.

7. Check the Early Settlement Terms

If you think you may repay early, review the settlement provisions carefully.

Release My Capital permits early settlement subject to the terms of the relevant agreement. This may include a notice period or interest payable in lieu of that notice.

Always check the specific settlement terms before entering into the facility.

8. Review the Initial Offer Carefully

An initial valuation or offer can help you understand how much funding may be available against your vehicle.

Any initial figure should be treated as provisional until the required valuation, checks and documentation have been completed.

Compare not only the amount offered, but also the interest, charges, repayment terms and conditions attached to the facility.

9. Consider Whether the Facility Fits Your Circumstances

The amount available is only one part of the decision.

Consider whether:

• the repayment structure is manageable;
• you have a realistic repayment or redemption plan;
• you understand the consequences of non-payment; and
• the cost of borrowing is appropriate for your circumstances.

If you are unsure about any aspect of the agreement, ask for an explanation before proceeding.

10. Check the Lender and Read the Documentation

Before entering into an agreement, check who you are dealing with and review the lender’s regulatory status where relevant.

Read the agreement and pre-contract information carefully and make sure you understand the terms before signing.

Customer reviews may provide useful information about service experience, but they should not replace your own assessment of the loan terms and costs.

Conclusion

An asset-backed loan against your car may provide access to capital without requiring an immediate sale of the vehicle, but it is still a secured borrowing commitment.

Before proceeding, compare the total cost, understand the repayment structure, check the early settlement terms and make sure you have a realistic plan for repaying the facility.

Release My Capital assesses eligible vehicles individually and explains the applicable terms and charges before an agreement is entered into.

Important: Your loan is secured against your vehicle. If you do not repay in accordance with the agreement, the vehicle may ultimately be sold to recover the outstanding balance.