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Car Loans

The necessity of having a car in the 21st century is at its peak with more and more cars in production than ever before. It is no longer the era of the one and two car families but the dawn of the three and four car families due to the dominance of the second hand car market.

Ever since the introduction of the six monthly registrations at the turn of the millennium car prices have fallen dramatically. Buying a car was always perceived to be the biggest commitment a person could make after purchasing a house. It is no longer seen to be a financial commitment that is crippling but certainly still restrictive to a person’s finances.

There is a vast amount of choice for the borrower to consider when searching for a car that satisfies demand but also desire. However, once you separated the good from the bad and made it clear in your mind which car to buy its then time to consider how to pay for it.

There are three options that the majority of the general public tends to choose. The most likely scenario is to apply for an unsecured personal loan from a bank, followed by agreeing to a finance package with the car dealer you are in negotiation with. Otherwise, the most common alternative is to part exchange you current mode of transport and pay the remaining balance out of your current finances.

Using a bank to acquire the needed finance offers potentially the most saving for the borrower. With the wide selection of deals available on the high street, it should not be a problem in discovering a personal loan that meets the criteria. The purchase of the car would be made outright with the capital loaned by the lender and repayments would be made monthly back to the bank in question over the agreed term.

A finance package with the car dealer does have its advantages too. The potential of being offered a generous discount on the sale or optional extras being thrown in for free is very tempting. It is certainly known in the industry to persuade customers in taking out one of their many finance packages as well as keeping their interest in the manufacturer for the purchasing of future models. The mechanics of the process are simple. The dealership will supply you with the ‘loan’ of which you are obligated to make monthly repayments, in accordance to the contract agreed between you and the salesman, directly back to them. In effect they are operating as a bank by supplying the loan, but they are more likely to negotiate on the interest rate and a repayment period you feel comfortable with.

The final option is to part-exchange your current motor vehicle and settle the remaining sum out of your own finances. Of course you could still apply for an unsecured personal loan from the two lenders mentioned before but the chances are the customer will have sufficient savings that should be able to purchase the car outright. This is not necessarily the most beneficial way to buy a new motor as the dealer is most likely to estimate the car you are part-exchanging below its true value. This is because they now have the responsibility of selling it on whereas you do not. This option is certainly a convenience motivated choice as apposed to the previous two being financially motivated.

Loans UK can find you the right car loan at the most competitive rates.