Thu 7th Jun, 2007
Obtaining The Cheapest Car Loan
Since the beginning of this year thousands of Britons have purchased new cars and it is predicted that about 400,000 more will buy a car this year, with many of them ending up paying too much by using an expensive car loan.
When it comes to purchasing a car, there are many financing options that are available to a consumer. One of the most popular types of finance is the hire purchase, which is a loan that is secured against the car that is being purchased. Often this type of financing is offered by the car dealership, however consumers need to realise that they do not own the car until the total amount of the loan has been paid off; until then the car is owned by the car dealership and can be repossessed should you miss payments and default on the loan. The other downfall to a hire purchase is the fact that it is expensive. Many car dealerships offer 0% interest on a hire purchase, however these deals often require a deposit of as much as 40 percent of the asking price. The average interest rates on a hire purchase schemes are typically in the double digits, whereas a personal loan can be obtained for less than six percent.
Buyers can take out a personal loan to fund the purchase of a new car from another institute, such as their bank or a lender other than the car dealership. With a lower interest rate buyers can save a significant amount of money in terms of how much interest is paid out. Another benefit of applying for a personal loan when purchasing a new car is the fact that you will have the money in place beforehand, giving you the advantage of being able to bargain with the dealer. There are many other forms of financing; it’s just a matter of finding what is right for you.