Compare car loans
So you've got tired of walking on foot and using public transport? Or does your old car seem like a museum-piece but is not worth even one fifth of it? All you think about is the new models that you see online, on TV, in magazines and in the streets? Oh boy, these are the signs of the car fever! The good news is that it can be easily cured by a car loan.
Can I afford a car loan?
If this question arises alongside with the images of your shining new vehicle, it proves you to be a smart shopper. It is very important to know not only what you want but what you can afford too. You would be surprised by how many people screw up with their loans just because of putting their desires above their capability. Therefore it is important to do some 'homework' on your financial state before heading to the dealership of a specific car. Following some simple but crucial steps can save you lots of time and money and help you to come up with the best auto-loan product you can possibly find.
The first step to take is to find out how good or how bad your credit is. Being unaware of your credit may result in overpaying for your loan package, i.e. your lender/dealer may put extra finance charges on your loan. When you know exactly what your credit score is you can either negotiate with a financial service provider upon the rate on the loan, or in case you had a low credit, look at the bad credit car loan products and see what best suits you.
An easy way to find out how much you can afford on your car loan is to subtract all of your monthly payments, for example rent or mortgage, personal loans, credit cards etc. from 50% of your monthly income. Multiply the balance by 40% and the result should be an estimate amount that you can spend on your car loan on a monthly basis. However, your financial services provider can make your payment higher or lower depending on your credit history.
What should I know about the car loan?
When your financial situation is clear to you, the next step is to decide whether you will be looking into taking a loan for a new or a used car. If you have an excellent or good credit score, a loan for a brand new car might be worth looking at, and if your credit history is a little bit complicated you may consider buying a used vehicle. But note that similarly to the loans of other kinds, people only seldom succeed in purchasing a vehicle without securing a loan. You should also be aware that the forecourt finance settling can increase the on-the-road price by hundreds of pounds.
You can take out a loan as low as a couple hundreds of pounds and as high as £100,000, but the average amount of loans available is ranging from £5,000 - £20,000 to new customers. An interest rate on a new vehicle loan ranges from 6.1% APR to 25% for online applications, but can be higher or lower depending on your financial situation and the type of the loan. The used car loans typically have higher interest rates but it also depends on the lender, your financial state and the life-time of the loan.
You can take out a loan for a desirable car purchase for 36, 48, 60 or 72 months. The interest rate on each of the loans would be different due to the lender, the life-time of the loan and your personal financial needs. As far as the type of the interest rate is concerned, it again greatly depends on the lender and your personal situation, but in most cases a fixed interest rate is applied. It remains unchanged during the whole life-time of your loan and equal monthly payments have to be made, which helps to plan your finances better.
Some of the lenders apply simple interest rate which is specifically designed for short term loans. When you borrow money for your car, your lender chargers the interest rate for the use of that money for a certain period of time. You pay back the principle - the amount of money you borrowed and the interest.
New or used?
The idea of buying a new car can be very appealing; however, purchasing a new car can have drawbacks as well benefits. Of course, the car will come with a manufacturer's warranty of 36,000 miles or at least three years. Some of them may even come with the 10 years warranty or the limit of 100,000 miles. The car will be characteristic of the latest safety, comfort, convenience and fashion features available for the time. And finally being the first owner will give you 100% certainty that it never had mechanical problems or accidents.
However, there will be a significant difference between the price of a brand new car and, for example, a three-year-old vehicle. A new car would increase the costs of comprehensive and theft insurance, despite the facts that some insures have special deals for newer safety features. Also, a new car looses 20%-40% of its value the minute you become the owner of it, and therefore it is very likely that you will stuck with the same car for a long time. One more benefit of a used car is that on the contrary to the ownership of a new car, the rate of depreciation over time will be less than the first two years of owning a new vehicle.
But you never know the full maintenance and repair history of a used car. It usually does not have a warranty, even though it may be available in case you're willing to pay extra for it. Furthermore, the vehicle may have less safety and convenience features and more than 100,000 miles, which increases the chances of higher maintenance costs.
Thus before making a decision of what kind of a car to buy, the above mentioned advantages and disadvantages of both new and used vehicles should be taken into consideration. But of course, your credit score still has to be the determiner number one in making the decision.
Bad credit - no car of my dreams?
There are a lot of people with a problematic credit history that have the right to have a vehicle of their dreams just as do the ones who have an excellent credit. There are lenders that are specifically taking up the problematic cases and aim to find the best deal that would fit your financial needs and capability. They are trying to find the lowest interest rate and the lowest down-payment possible and make your wishes come true. Problems like tax liens, judgments, bankruptcies, garnishments no longer make the lenders frightened; on the contrary, they give a new niche for the financial services providers to take up.
A bad credit car loan is specifically designed as a financial aid for people with poor or bad credit. Unfortunately, these customers have to accept that they have less power as far as deals and purchases are concerned. But with the help of a bad credit car loan they can increase the market purchasing power and buy a car they want.
What are the other benefits of this loan? In a bad auto loan, one is obliged to increase his or her credit score as a guarantee that he or she is able to pay up all the expenses on time and that there will be no problem paying off the car loan.
Therefore before deciding to take out a bad credit car, be careful while choosing the lender or dealer. Pay a special attention to the reputation of the financial services provider you will be dealing with in order to avoid the trouble that can cause inexperienced or untrustworthy lenders. Once again - learn to do the math and be careful with the deals that are suspiciously tempting but too good to be true. Avoid maximizing your loan. Getting a long time credit inevitably means working harder for a longer period of time in order to pay off the loan of the car, the value of which might depreciate a lot quicker than that. For people with bad credit history experts suggest buying a 2 or 3 year-old cars because the cars of these kinds can help to achieve more preferable trade deals.
Is refinancing possible?
Refinancing of your car loan is not only possible but even necessary. Many people have a misbelief that an appraisal is necessary in order to refinance his/her loan. It is always required for the refinancing your mortgage due to the fact that your home is the equity of it. It is different with your car loan because it is based not on the value of your car but on how much you need to pay off.
However, refinancing of your car loan is similar to the mortgage refinancing in the respect that it can make your monthly car loan payments lower and help you save money on a monthly basis. While refinancing your car loan, you either use your current lender to take an advantage of the lower interest rate offered, or you switch to a different lender that offers you a better deal and helps you to pay off your loan even quicker.
People with bad credit history usually think that they have no chances of refinancing their car loan with a lower rate and this kind of assumption is totally wrong. It is very important that people who are paying high APR would be looking into refinancing because during the life-time of a loan they might improve their credit score and therefore qualify for a better rate.
The earlier you refinanced your car loan the better because the interest is mostly paid in earlier payments in car loans. Thus the earlier you refinance your loan, the more money you save. And do not even ask if it is worth refinancing because anything that is at least one percent lower than your current interest rate is worth a shot.
How much could I borrow?
You could apply for any car loan amount up to £25,000, for example £500, £750, £1000, £1500, £2000, £2500, £3000, £3500, £4000, £4500, £5000, £5500, £6000, £6500, £7000, £7500, £8000, £8500, £9000, £9500, £10000, £11000, £12000, £13000, £14000, £15000, £16000, £17000, £18000, £19000, £20000, £21000, £22000, £23000, £24000, £25000.
How to apply for a car loan?
If you want to apply for a car loan, please fill the form on the top of the page. It is quick and easy to make an online application. Just take a few minutes to complete the form so we can get a clear view of you, your finances and your needs. Our experts will assess your situation and get back to you with no obligation debt consolidation loan quote. It is up to you to take it or not.
- Typical 14.9%APR variable
- Rates from as low as 5.7%APR variable. Our highest for customers with severe credit problems is 39.9%APR variable.
- THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
- Loans subject to status and secured on residential property by way of second charge. Minimum age 18 years.
Loan comparison table
View a selection of rates and deals by checking out our Loans Comparison Table below. If you like to receive a personalized loan quote, please fill the form above.