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Possible steps to help you find the right car loan

After you have sorted out what car you want, there will often also be a number of loan providers falling over themselves to offer you credit to buy it, depending on your credit rating. In fact if you are going for a vehicle straight from a garage forecourt, you can even find that the seller offers you their own finance plan. This is an option and a convenient one at that, but shopping around and looking at different deals may be the best way to find the right car loan.

After you have sorted out what car you want, there will often also be a number of loan providers falling over themselves to offer you credit to buy it, depending on your credit rating. In fact if you are going for a vehicle straight from a garage forecourt, you can even find that the seller offers you their own finance plan. This is an option and a convenient one at that, but shopping around and looking at different deals may be the best way to find the right car loan.

While the plus and minus points of some different deals from some different companies may seem quite similar, others are vastly different in terms of interest rates, payment periods, and how they work. For example, a straightforward option offered by your own bank may not be the best way of financing your purchase, and it may also be sensible not to simply assume that you won't be able to get credit from anyone else.

One tactic used by some car showrooms is to offer somebody a lower price on a car or a higher specification of vehicle if they take their offer of hire purchase. It could be wise to avoid going for this, and instead you could always try making sure you haggle on the price of your car separately from any potential loan deal.

As with any form of loan, it can pay to pay particular notice to the APR. Knowing exactly how much you're going to be paying in advance can help you to plan better to pay off the loan, and the rate you will be offered will often depend on your credit rating.

In some cases you may only be able to get the interest rates from certain providers if you take out a loan above a certain amount, perhaps £5,000, for instance. This can often mean that the interest rate goes down considerably, and therefore mean that by taking out a bigger loan you can get a much better rate.

The best way to find the right car loan can also involve a bit of homework on the different types of deal. For example there are even some forms of borrowing which involve zero per cent interest, although they may require a considerable deposit, perhaps as much as 40 per cent.

Of course it can be off-putting to know the route to find the right car loan can be almost as tricky as finding the right car – but it could be well worth the effort as the correct deal could save you a considerable amount of cash in the long run.

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Back to May 2009

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