All You Need To Know About Car Loans

December 11th, 2019
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All You Need To Know About Car Loans

How to Get a Car Loan? – the Finding popular Methods

For most of us, a vehicle is the second most expensive thing after a home. It is always a dream to buy a speedster that looks gorgeous and rolls across the roads. But, things may become challenging as it is an expensive bet. One must think about various financial options and choose the cheapest of the lot. Car loan is one of the safest way to manage money for buying a car. Find here the various methods of getting a car loan and decide the one that suits you the most.

Bank loan for car purchase:

Secured loans: There are two types of loans – secured loans and unsecured loans. The latter is bought from the bank without putting any asset like a home or property at stake. It is given for a smaller amount of money such as £25,000.

Contrary to this a secured loan is one that you get on putting an asset like a home, property or other valuable belonging as collateral. In case of non-repayment of money, the loan provider can repossess the asset. As it has a valuable possession kept at stake, it allows borrowing of higher sum of money that can be up to £100,000.

Depending upon the value of your car, you can choose any of the two kinds of loans and depending on your credit score, the bank will decide on approval of your loan. Also, keep in mind that secured loans can have lower rates of interest and can be spread across a longer time period. In case of unsecured loans, the loan period is quite short with high car loan rates. So, decide which kind of car loan will suit you the most.

Hire purchase plans: This kind of loan helps you buy the car by paying the monthly instalments but do not give ownership of the car until total payment is made. Many dealers facilitate a hire purchase plan so that one can buy the car within a specified time period. So, you can drive the car and own it but not on paper. You have to pay an initial deposit amount followed by monthly instalments. If you fail to repay the money then the car could be repossessed by the dealer. You cannot resell the car until you actually acquire it.

Personal contract purchase: This financial arrangement is similar to Hire Purchase plans with an added advantage that you can hand back the car if you are not interested in keeping it. The monthly instalments are smaller than Hire Purchase plan. If you are serious about owning the car then you have to pay the balloon payment, an amount which is much higher than monthly instalments.

In case, you are not happy with the car during that particular period then you can return it to the dealer. You can claim ownership of the car only after the final balloon payment is made. You also have to deal with mileage caps until the car is actually yours.

Buy the car with a credit card: You can also buy the car with your credit card. As the amount of credit card loan would be small, this facility is best when you want to buy a second hand car. You can also leverage the interest free period offer. By paying repayments within the interest free time, you can buy a car at its actual price. Also, with a credit card purchase you get extra security because of the Consumer Credit Act, which allows you to claim your money back if something goes wrong with the purchase of any product between £100 and £30,000.

These are some of the most widely used methods of buying a car in the UK. You can shop around to find the best car loan deal at the lowest car loan rates. For this, check our car loan comparison services at freepricecompare.com. You can also call us on 02034757476.

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