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Choosing car loans

Here are some factors you may wish to consider when choosing car loans.

Here are some factors you may wish to consider when choosing car loans.

•    there are numerous ways of choosing vehicle loans and many factors need to be taken into account when doing so, as what may work out the best for one person does not necessarily work out best for another;
•    it makes sense to decide how much you want to spend in total on a vehicle before actually going out and making the purchase. Once you have set yourself a figure stick to that sum no matter what. It may be very tempting to see a car on the forecourt and to go over your budget, however, if you cannot comfortably afford it, then do not give in to temptation;
•    if you want to keep down the amount you pay each month when taking out a personal loan or hire purchase agreement you may wish to spread the borrowing over a longer period of time;
•    do bear in mind however, that when spreading out the loan over a longer period you add more interest onto the total amount so the vehicle costs more;
•    a personal loan may come with lower rates of interest than the dealers hire purchase as you are able to shop around for the most suitable deal;
•    there are specialist car finance websites that allow you to search for a used or new vehicle and find a loan, and this may save a great deal of time and effort;
•    when choosing the above option often you have to do very little on your part as the finances are typically paid directly to the dealer and all you have to do is pick up the car;
•    when taking out a personal loan that comes with an introductory interest rate check what interest rate the loan defers too once this introductory rate has passed. In some cases you may end up not getting the bargain you thought you were getting;
•    also check you do not have to pay any fees if you pay off the motor loan earlier than you thought;
•    if you are considering a personal loan as a way of purchasing the vehicle you may want to pay a lump sum towards the vehicle as a deposit, if you have it spare. This means you have to borrow less so in the end you pay less in interest which may work out in your favour;
•    you may be able to get cheaper loan interest rates if you go with a specialist than you might if you take what the dealership offers;
•    car loans interest rates are typically cheaper if you have an excellent credit rating. Therefore, you may wish to check your own credit rating before applying for the finance.

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Back to January 2010

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