If you are thinking about buying a new car you are probably considering from where to get a loan. Assuming you live in the United Kingdom and want to take out a car loan, you should consider all the deals available and shop around for the best one. Each loan company has different criteria so you need to consider all of these before making a decision. If you do not plan wisely you may be paying a high rate of interest which could cause financial problems as the United Kingdom is not a cheap place !
These five points may be useful to consider.
Look at the options :
Keep in mind the various choices that are available to you in the UK. There are so many that it makes good sense to take time and effort in choosing the right car loan for your circumstances.
A secured or unsecured loan :
Unsecured loans in the UK are good for car buyers who do not want to have their homes offered as collaterol . or indeed if they have no property to offer anyway. The advantage of unsecured car loans are reasonably low interest rates, currently between 6 - 9%. Also the monthly repayments are more manageable. The disadvantage is that you must have a good credit rating to apply for such a loan.
Choosing a variable or Fixed Rate loan :
Both options have advantages and disadvantages. With a variable rate loan there is a chance of rate increases in the future, however, if the rate goes down, you could benefit financially. Interest rates on fixed loans are constant for the life of the loan, so managing the loan is much easier.
Balloon payments :
The basic thing with Balloon payments is that as you have agreed to pay the full amount at the end of a predetermined month, you have no worries about affording monthly repayments. Advantages of Balloon payments are attractive due to there being no risk involved
Do you approach car finance companies ? :
There are many car finance companies in the UK that offer loans to people whether their credit rating be good or not so good. For people with bad credit ratings this option is a distinct advantage as they are able to buy a car, whereas under other circumstances this would not be possible. However this type of loan is often considered disadvantageous, as such a loan is seen as high risk lending and and consequently carries a high rate of interest.
