Things To Consider in Buying a New Car

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.

My Financial debt story - England

The government are planning many different possibilities to solve the problem of debt in England. One idea that they have would be to compel credit card firms to double the amount that their customers have to pay back. Minimum repayments that are now at 2% may be increased to 5% according to an announcement recently made by the Consumer Minister on behalf of the Government.

An example given was based on a customer borrowing only £1400 - paying this back at a rate of 2% would take about 40 years to repay, the customer would also be paying a huge amount of interest which would increase the total amount repayable to £4800 - about 3 times the amount originally borrowed.

In addition the government want businesses to use customer repayments to clear higher rates of debt before those at 0%. Also it is planned to stop the large credit card companies from raising credit limits without permission, which at the moment they are at liberty to do. Some companies re-price existing credit limits as well and the government want to act so that they can no longer do that.

Finally it has been seen that the marketing plans and procedures of some companies are designed so that they can attract customers into borrowing more money than they can afford. At present it is estimated that people in England owe £56 billion on credit and store cards.

A representative from the organization 'Moneyset' has said that these new proposed plans by the government will be a great help to customers who are borrowing, or are thinking about borrowing money, because at the moment many are having serious financial problems as they struggle to keep up the current repayments.