What to expect from cheap car loansOffers for cheap car loans seem to pop out at you from everywhere: from your computer screen whenever you are looking online for a car; in magazines; on the TV.... So what can you expect from a cheap loan, and how do you distinguish between the deals?
Offers for cheap car loans seem to pop out at you from everywhere: from your computer screen whenever you are looking online for a car; in magazines; on the TV.... So what can you expect from a cheap loan, and how do you distinguish between the deals?
The interest rates quoted on the brochures you have seen fall out of magazines are usually the typical APR (Annual Percentage Rate) that would be offered to a borrower of moderate to good creditworthiness, for the amount stated. You may wish to compare such rates on a specialist motoring website, so that you can assess many lenders’ rates at once.
However, before making any decisions about which lender to choose, you need to establish exactly what rate the lender would be prepared to quote you, with your credit history. Your credit history tells prospective lenders effectively how risky it could be to lend to you, and they will adjust their suggested interest rate accordingly. So generally speaking, the better the potential borrower’s credit history, the better (lower) rate they will be quoted.
Length of term
Your circumstances will probably dictate how long you want the loan to last. Taking a long time to pay off cheap car loans can prove costly; after all you are spreading the payments over a longer period of time and therefore accruing more interest. If this is of concern, you may wish to choose a loan with a shorter term to reduce the overall interest you will pay. On the other hand, if you are looking at things on a month to month basis, a longer term might be more suitable to allow ease financial pressures on your household for the time being. As always, for any particular concerns, take specialist advice.
If you put down a deposit on the vehicle, there is less risk for the lender because the loan to value ratio is more favourable. From the lender’s perspective, the if a borrower has put down a significant deposit on a car, there is plenty of value in it to cover the amount of the outstanding loan. So if you got into difficulties and could not make the repayments, the lender assumes that you could sell the car and receive enough from the purchase price to repay the outstanding amount.
Will they lend to you?
The final point to bear in mind is whether the cheap car loans provider would be willing to lend to you. Visiting a specialist website for help could be the solution to enable you to buy the car of your dreams.
Posted by Edwin Miles on