Get A UK Car Loan Quote Online
Information On Applying For A Car Loan In The UK
Nearly a quarter of a million
new cars are purchased each year most of which are funded by a car loan.
But with so many options available it is sometimes difficult to choose
the car loan company that is right for you. To help you understand the
different options and help you to select the one that best suits you see
the guide below to car financing.
Generally there are three ways to a car loan for your intended car
purchase, whether it is new or secondhand: personal loans, hire purchase
and personal contract programs.
If you are buying a secondhand car remember that you should also
check out the history of the vehicle you are buying to ensure that there
isn't any credit outstanding on it. Also that the vehicle hasn't been
an insurance write-off in the past or even stolen.
Many people choose to finance their car purchase with a personal loan.
This allows you the flexibility to shop around for the best vehicle
as well as putting you in a strong position to barter as a 'cash purchaser'.
With the lowest interest rates below 10% this can be an attractive option.
If you have had credit problems in the past or have County Court Judgements
recorded against you then it is unlikely that most of the high street
lenders will be willing to assist. But there are lenders who will look
sympathetically at the individual circumstances and may be prepared
to lend.
Advantages of Personal loans.
The term is usually flexible and can mean unsecured or secured
loans enabling
you to select the payment that you can afford, as well as allowing you
to shop
around for the best
car loan rate. This puts you in the position of a 'cash buyer' enabling
you to negotiate a better price. You can sell the car at any time if
you wish to do so. A personal loan gives you the flexibility of buying
a car privately rather than through a dealer. The car loan can usually
be cleared at any time with a minimum of fuss (there may be a penalty
to pay if you redeem the loan early).
The car loan can usually be applied for online or over the telephone
and in many cases the lender can give an instant decision. You can usually
take out payment protection so that the payments are still made if you
are unable to work. You own the vehicle at the outset and the car loan
is not secured on the vehicle. The interest rate will usually remain
fixed throughout the term enabling you to budget with certainty.
Disadvantages of Personal loans.
The car loan is unsecured so underwriting criteria can be stringent. Repaying early can incur a fee. Typically this will be one or two
month's interest payment. Check the terms of any loan offered before
taking it out.
The lender may not be prepared to finance the entire purchase price
and may require you to pay a deposit from your own resources. Most lenders
are not prepared to grant a car loan over more than five years and with
many, the maximum term will be three years, particularly if it is an
older car you are buying.
The cost of payment protection will increase your monthly outgoings
and the terms of these policies vary considerably. If you are taking
out a payment protection policy, ensure that you read the small print
and understand exactly what you are and are not covered for. If
you take the car loan out in a period of high interest rates then the
initial rate will usually be fixed for the period of the loan.
Hire Purchase.
This is normally arranged by the car dealers. Before proceeding
you should check out details of other types of car loan finance from
both manufacturers and personal loan providers.
Advantages of Hire Purchase.
If you arrange the finance independently it can put you in the position
of a 'cash buyer' enabling you to negotiate a better price. Because
you are usually required to put down a deposit of 10% - 15% it means
that your monthly repayments are lower. The term is usually fairly flexible
enabling you to select the payment that you can afford. The interest
rate will usually remain fixed throughout the term enabling you to budget
with certainty. You can usually take out payment protection so that
the payments are still made if you are unable to work.
Disadvantages of Hire Purchase.
You do not own the car until the last payment has been made. If
you fail to maintain the finance payments then the car may be repossessed.
The car dealer will often prefer to sell his own finance package, as
he will earn commission on any finance taken out through him. You will
usually be required to pay a deposit of between 10% and 15% from your
own resources. You cannot sell the car without repaying the car loan
agreement in full. The cost of payment protection will increase
your monthly outgoings and the terms of these policies vary considerable.
If you are taking out a payment protection policy, ensure that you
read the small print and understand exactly what you are and are not
covered for. If you take the agreement out in a period of high interest
rates then the initial rate will usually be fixed for the period of
the agreement. Not suitable if you wish to buy a car privately.
Please Note! Your home is at risk
if you do not keep up repayments on a mortgage or other loans secured
on it.
| 
