Use a car loan to finance the car of your dreams
Just over 30 years ago, only 50% of households had access to a car. Nowadays, over ¾ of households have access to one. This is a considerable increase in the number of cars on the roads. This, in turn, has lead to increased congestion, pollution and road rage but as UK consumers we still love the car as a method of transport and 4 out of every 5 trips we make are made by automobile.
As over 55% of the UK population makes no savings at all every month, we are hardly likely to be able to buy a new car or a used car outright when we decide that the time is right to trade in or sell off the old model. That is why a car loan is an incredibly popular source of credit.
Car loan basics to put you in the know:
| | 1. A UK car loan is an unsecured loan, meaning that you own the car from the day you get it. If you default on the repayments the car finance company cannot automatically repossess the car, but they can take you to court which could lead to CCJ’s against you and a bad credit history too.
2. As the loan is unsecured, the interest rates will be higher than a loan such as a homeowner loan, which is secured against your property.
3. It is specific to a purchase, as you can only buy a car with the money, not anything else!
4 . Your monthly repayments are set at a fixed interest rate so you will know just how much your monthly commitment will be for the entire term of the loan.
5. You may be required to make a deposit up front or a balloon payment at the end of the agreement. You should always check the terms of the loan and make sure that a loan that seems affordable doesn’t leave you with a nasty taste in your mouth. |
What other terms can a car loan be known as?
| | 1. Car finance or auto finance.
2. Auto loan.
3. Vehicle finance |
Where can you obtain a car loan from?
Most financial institutions will offer car loans. We suggest that you try banks, building societies, auto loan specialists (which there are a raft of online), brokers and even supermarkets. Car dealerships will also offer you car financing options but make sure you check out their small print, the term of the loan and the APR before making any decision. Don’t let them fool you; be prepared and thoroughly research other lenders before walking onto the forecourt. Check out the interest rate and length of loan offered by a range of car lenders and determine what the best car loan is for making your car purchase.
