Car Finance Options
Apart buying a house, a car is the most expensive purchase most people will make. Whether you're buying new or second hand, most cars will be much more expensive than you could afford to pay in one go, making some kind of finance essential for most car buyers.
The ways of financing a new car vary, mainly depending on how good or bad your credit rating is.
Standard Personal Loan
The cheapest and most popular way of financing a car purchase is with a personal loan, either from your own bank or one of the many online unsecured loan brokers. These loans will often have very attractive rates, but will tend to require a clean credit rating and a fairly large income compared to the amount you're borrowing.
In short, not everyone will get approved, and in some cases over half of all applications are rejected because of the strict acceptance rules.
Specialist Car Loans
Although any personal loan can be used to buy a car, some lenders will offer loans specifically for that purpose. A common feature of these loans is a 'deferred final payment'. This means that you don't have to repay the full cost of your car over the loan term, but only a percentage of it's value, leaving a large final payment of maybe 40-50% at the end of the term.
To cover this cost, most people will sell their car to clear the debt, and then take out a new loan to finance a newer car. This system means that the monthly repayments are much lower than they'd otherwise be, making car ownership more affordable.
Again, however, approval criteria can be quite strict, and so people with less than perfect credit may find that this is not an option open to them.
Next: Options for people with bad credit >>>
Home - Car Loans
