Which Loan Is Best When Buying A New Car?
By Philip Drew
Lenders understand that when buying a new
or used car, getting the best interest rate
for car loans can make a big difference to
the amount you end up paying for the vehicle.
There are basically two types of loans available;
secured and unsecured car loans.
If you are a homeowner, whether you own your
home outright or are repaying a mortgage,
you can apply for a secured loan. This means
that you use your home as collateral or insurance
for the loan and will generally enjoy lower
interest rates than if you don’t use your
home as security. You’ll also find that your
loan will be approved faster and even though
processing can take a little longer than for
unsecured loans, the money you save on the
lower rates is well worth it in the end. Just
make sure that you are confident that you
can keep up with the agreed monthly repayments
because if you don’t, you could be at risk
of losing your home through repossession.
Unsecured car loans are so called
because the lender doesn’t require any
security for the debt. But in return for
you not putting your home on the line
you pay higher interest rates. Even though
the lender is taking more of a risk, it
is highly likely that if you don’t repay
the money borrowed, the lending company
will take you to court and you could still
lose your home. So make sure your monthly
budget can comfortably afford the repayments.
If you want low cost car loans then a
good place to start is by comparing the
APR from different lending companies.
Because lenders quote interest rates in
different ways it can be confusing so
it is worth making sure you understand
what you’re being quoted so that you can
choose the best deal. You will also find
that some offer fixed rates (these are
interest rates that remain fixed throughout
the term of the loan, regardless of fluctuations
in the bank base rate - your monthly repayments
will remain constant for the term of the
loan) and variable interest rates (these
rise and fall with the bank base rate
so you could find that your monthly payments
go up and down during the term of the
loan). Loan companies also offer typical
interest rates as an indication of the
rate you are likely to be offered but
this can vary depending on your specific
circumstances. These include the amount
you want to borrow, whether or not you
want secured or unsecured car loans and
in the case of unsecured loans, your credit
history and personal assessment by the
lender.
Loans are generally repayable on a monthly
basis and the term of payment is agreed
when the loan is taken out. Although a
low interest rate is a good indication
of a cheap loan, you should always make
sure that you are aware of any additional
costs, for example an early redemption
penalty. This is the charge levied by
the lender should you wish to repay the
loan in full before the agreed term has
run its course. This could be up to two
months interest. If you think you may
wish to pay off the loan before the end
of the term then it may be wiser and cheaper
for you to go for car loans with no early
settlement costs even if you pay a slightly
higher interest rate.
For more information on the best loan
for you and a competitive comparison of
car loans and interest rates from leading
lenders, all you need to do is approach
a loans broker or loans comparison website,
as they are not necessarily tied to one
deal.
Fast online application for secured and
unsecured personal loans from a wide range
of leading lenders. Bad credit welcome,
so why not visit: 24
Hour Loans
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