1. Know All About
Car Finance Deals
It is estimated that about four in ten
personal loans availed in UK are for
buying cars. After house, purchasing a
car is considered as a major investment
by many. While many are able to drive
away with a brand new car, some others
are contended with a used car. In the past
only those who possessed ready cash
could buy an expensive car, but the situation has definitely improved today, with the arrival of
car loans.
Depending upon the cost of the car and your repayment capacity, many kinds of financing
options are available in the car market. You may buy it directly from the manufacturer, you may
avail a car loan from your bank, you may
find it at an auction place or you may
contact a car dealer. Garages are also an
option. Supermarkets also have cars on
sale. Then there are friends, relatives or
neighbors who may be selling their car.
And if you're not so sure there are
specialists out there willing to offer their
service.
One such option is PCP or personal
contract purchase in which an initial deposit is submitted initially followed by monthly
installments. At the end of the contract period, the final lump sum amount is paid and the car
becomes solely yours. You can also switch over to another car and continue making repayments
or simply return the car to the owner. But be careful- since you don't own the car during the
contract period, so any default in repayments and the car may be repossessed. The second option
is Hire Purchase (HP). This is almost
similar to a bank loan in which you pay
monthly repayments for a fixed time
period and at the end of the agreement the
car is yours. Contract Hire financing
gives any business the freedom to lease
out new cars without buying them.
Any one with a good credit report can
easily get standard bank loan and it gives

2. you the freedom to purchase your car from anywhere. Direct lending is also possible with
financing companies and credit unions. Secured car loans may require you to pledge your
property against the loan amount. Unsecured loans do not involve pledging any property. One
may get up to 20,000 under this scheme. Bad credit car loans are available at higher interest rates
with private dealers and financing companies. But they may require you to buy car from a certain
dealer. The most common type of car financing involves the dealer and the buyer. A contract is
fixed and the buyer agrees to pay the amount financed plus interest for a fixed period. The dealer
usually sells the dealership to a bank or financing company which then manages the repayments.
Online car loans are also becoming a popular option among many who want a hassle free deal in
the comforts of their home.
All of the above options have many merits as well as draw backs. While a PCP loan keeps your
monthly payments lower than a personal loan; a personal loan has the lowest annual percentage
rate (APR) among various car finance options and doesn't have any arrangement fees. The
disadvantage with HP is that you don't own the car during the hire period.
So, how can you ensure yourselves to sort out the best car finance option? Simply shop around.
Extend your search beyond your bank. Many online financiers have car loan calculators for
comparing various deals. Know in advance the interest that you will be paying. Get the terms and
conditions in written form. Go online with a specialist broker if you are in doubt, all these with
your repayment capacity in mind.