Car Finance & Loans |
| Find out how much the car you want could cost on hire purchase with a Car Finance Quote |
| Also Check out our
Car Insurance, Car Warranty |
GAP Insurance A GAP Insurance policy will cover you against financial loss should your car be stolen and/or written off, filling the gap between the current market value at time of write off and the original purchase price and any outstanding finance.
i.e. if you paid £10,000 for your car and your insurance pay out is £6,000, and your finance owed was £9,500: GAP insurance will pay the remaining £3,500.
PPI Payment Protection Insurance - Should you become ill because of sickness or an accident, or unexpectedly unemployed you may have trouble keeping up your loan payments. Payment Protection Insurance ensures your loan will continue to be paid even though you are unable to make the payments yourself.
|
Car Loans & Car Finance explained in detail
The first thing and most important thing to work out are how much money you can borrow and more importantly how much you should borrow. Just because you get approved to borrow a sum of money doesn't mean that you should stretch yourself to the limit and you should always have reserves to make sure you can afford anything unexpected. Make sure you have calculated everything else you might be paying for month on month and the borrowed amount is still realistic.
What's the difference between a secured or unsecured loan?
A secure loan is a loan where your assets such as a house are used as collateral for a loan.
A secured loan is likely to be your only choice when spending large amounts on a car, it's unlikely that a lender will take a risk with an unsecured loan on a high value vehicle above the 30 thousand mark. Rates will vary from many lenders so your best bet is to use a comparison site such as money supermarket to get the best loan rate.
An unsecured loan is where a loan agreement is made without the need for collateral, this is also known as a personal loan. This type of loan is based on your credit rating and your current income.
Unsecured car loans are normally limited to around the twenty thousand mark but this is enough to cover many nice new cars and used cars.
Getting Finance through the car dealer
The Hire Purchase Agreement as it's know is one of those things every car dealer tries to up sell to you once you have spent hours deciding upon your next car. A Hire Purchase Agreement is structured in a monthly repayment plan but the important thing to remember is that until you have fully paid off your car you don't own it! The company you got the car finance from owns it. Make sure you read our car dealer scams guide as well so that you are on top of the game when it comes to this all important moment at the car dealership.
Credit Score? What is that?
A credit score is a record of your previous financial commitments with other lenders such as credit cards and mortgages. Your credit score will show a rating for the risk involved in lending to you based on your past and current financial arrangements, if you have missed repayments in the past this will look unreliable to a lender. If your rating passes what a lender believes is acceptable risk they will approve your car loan application.
Look at your credit report
There are a few companies such as Equifax that will provide you with a credit report for a small fee, some offer a free copy if it's the first time you have used the service.
I checked my credit report and it's incorrect!
If you have found information on your credit report that is incorrect you should report it immediately. This can have a serious effect on the decision making when applying for a car loan. This can also be an indication of identity fraud and you should keep an eye on your credit report regularly.
Deciding how long to take a car loan out for
You really need to shop around when looking for a car loan, getting the best car loan can vary depending on the length of the loan. A loan over a short period will warrant higher repayments but you will end up paying less in the long run. A long term loan will be easier to manage month on month but in the long run you will have paid considerably more. Everyone has a happy medium so shopping around on a comparison site such as money supermarket will give you a better idea of what is best for you.
What to do if you get turned down for a loan
A common mistake is often made when turned down for a car loan, applying for lots of loans shows up on your credit report and will look bad to a potential lender. Make sure you have all your financials in order before reapplying to stand the best chance of being accepted. If it's a matter of simply not earning enough money perhaps you should reconsider your loan amount or wait until your circumstances change such as a new job.
APR and additional charges
The average interest rate over the term of a car loan is referred to as APR. The APR takes into account any fees, insurance and interest. If you wish to repay your car loan early you will have an additional fee to pay to close the contract, this is normally one month's payment and will be made clear in the terms and conditions of the car loan.
Read the loan terms and conditions!
Check the interest rate of the deal and make sure it's not too high. If you have a personal contract hire you will have a few important things to look out for, first will be the monthly rental cost which will depend on servicing, car maintenance and the miles travelled.
When you have a Personal Contract Purchase (PCP) make sure the Minimum Guaranteed Final Value is a good price when the contract ends for you to buy the car and that you haven't broken the contract by exceeding the maximum miles stated.
Help! I can't afford the repayments
Defaulting on your payments will incur a fee and things can get out of control quickly, you should contact your lender and let them know, they may be able to refinance a deal for you or help you work out a better way to manage your budget.
What if I am ill or lose my job
There is insurance called Payment Protection Insurance (PPI) which can be purchased to protect you in the instance that you fall ill or lose your job. The insurance plan will take over the payments for you and continue to pay your car loan for as long as the length agreed in the terms and conditions.
A PPI can be an expensive additional purchase and it's best to shop around for a good one if you feel you need it.
I don't want the credit agreement offered by the dealer
Don't sign at the dealership! Take advantage of the cooling off period.
You must cancel you agreement quickly, within a stated cooling off period, normally a couple of weeks. The purpose of the cooling off period is to give you enough time to make the right decision on the car finance.
As you are not the owner of the car until the last payment is made your agreement can be terminated at any time. If you have already paid half the credit owed on the car you can hand the car back, but you will lose all payments previously made and may be liable for additional charges.
The worst case scenario is not having paid half the repayments. You will lose the car and incur additional outstanding payments charges.
|
 |
|
|
|
