Car Loans

When you buy a car, one of the most important aspects to consider is the cost, and how you are going to finance this purchase. You might take out a hire purchase agreement or personal contract plan, or you may take out a personal loan. A personal loan means borrowing the amount you need to buy a car, then paying this amount back in monthly instalments at the agreed APR (annual percentage rate). This means that you own the car immediately and most of these loans are unsecured

You may want to go for a specific car loan, which often has benefits such as free breakdown recovery, or just a non-specific personal loan which often has a lower APR. You will be subject to credit check once you have applied for a loan, which means the loan provider will make sure you are a suitable candidate for a loan and do not have a poor credit rating.

You can apply for a loan with any bank or building society, and this can now be done over the internet, by phone and in person.

Below are some examples of types of personal loan and typical APR/repayment details, these are likely to change from month to month

Norwich Union

• Apply by phone or online.
• You can receive the cheque within 24hrs at a cost of £45
• There are no repayments for the first 3 months.
• Typical APR is 7.2% for loans of £7000 and over.

Car Loan Plus

• Instant online decision
• £30 cashback when you take out Norwich Union breakdown cover.
• £25 cashback when you take out Norwich Union insurance.

Creditcare

• Protects your repayments if you are unable to work due to accident or sickness.
• Maximum of £1000 monthly benefit for up to 12 months.
• Cover if you are employed or self employed.
• Life and accidental death cover for the full loan amount.
• No medical required.
• No excesses.
• Cost will be based on loan amount.

The AA

• No repayments for first 3 months.
• Repayments over 1-7 years.
• You can receive a cheque in 24hrs at a cost of £45 (if request is before 3pm).
• Typical APR 6.3% for loans of £5000 to £25 000.
• Free AA car inspection worth up to £174.

Creditcare

• Protects your repayments in the case you are unable to work due to accident or sickness.
• Covers the full loan amount in the case of accidental death.
• The Silver Plan also covers unemployment, and the Gold Plan covers unemployment and critical illness for up to 12 months.
• You must be between 18 and 65years old, a UK resident and employed/self-employed.
• The maximum they will pay on outstanding balances is £50 000.

The Cooperative Bank

• Car Loan
  • Free Green Flag roadside assistance plus homecare for the duration of the loan.
  • Repayment over 1-7 years.
  • APR of 8.4% for loans of £15000 – £25000 (goes up to 16.4% for £2000 loan).
• Personal Loan
  • Typical APR of 7.9% to 8.9%.
  • Repayments over 1-7 years.

Top Tips

• Some loans offer 0% APR – this may not always suit as you are often required to repay the full loan amount within 36 months.
• Low APR loans – these are often only available to those with a perfect credit history – plus they are often required to be repayed within 12-36 months.
• Always check your own credit rating before you apply for a loan – if you have a low score it may mean you have to repay loans at a higher interest rate (plus it can affect your job prospects and mean you have to pay higher insurance premiums).
• If your credit score is below 550 – do not apply for a loan until you have repaired your credit.
• Ensure your debt-income ratio is below 30% before applying for a loan.
• Credit balances should be below 50% of the limit, otherwise they could drop your crdit score.
• There are benefits to applying for a loan online – you get an immediate response, there are no application fees and they may also have lower APR’s.
• Check the APR’s of all loans and compare them.
• Consider creditcare – it will increase the cost of your repayments, but ensures that if you are unable to work (illness/injury) the loan repayments will still be made.
• You can check your own credit ratings online with: Equifax , Consumerinfo and Truecredit .

Some helpful websites :

• http://Apl.moneysupermarket.com/loans
• http://Loan.uk.com
• http://www.bad-credit-loans.uk.net
• http://www.debtwizards.co