Top 10 Car finance in the UK
There are many reasons you may need to take a car loan. It may be for business or family. As a business person, getting to the bus terminal every time you need to make a move can eat deep into your time. This can cost you meetings and limit your flexibility.
If you’ve got kids of your own, a car will make it easy for you to move them around. The problem is being able to buy a car. Because it’s not everyone that can afford to buy a car from their income.
A car finance loan will help you get a car now while you pay back over a period. But, the question becomes “which car finance loan is best for you?” There are many ways to get funding for your car project but you want to get the right one. It’s important that you get this right so that you don’t accrue so much debt to yourself that rids you of the car.
What is Car Finance?
Car Finance is a secured loan which is taken particularly for the purpose of buying a car. It gives you the chance to get a car which you can’t afford to pay once for, and helps you conveniently pay back the cost of the car within a reasonable time frame. Although, just like every other loan, you will definitely have to pay back with interest unless otherwise stipulated in the terms of the contract. A good option for car finance would be to go with a short term loan and the good news is that these are quick loans with cash in the bank the same day as the application.
Types of Car Finance
Car finance is usually secured against the car. This means that you become the owner of the car when you’ve fulfilled your part of the contract. We’ve included personal loans as a way to finance your car project — though it is not secured. It’s important you know the types of car finance available so that you’re properly guided to make the right decision.
Personal Loan: You can opt for a personal loan to finance your car project. This is an unsecured loan that you take for a stipulated period of time and payback monthly. With this loan, the car is yours from the beginning of the payment period. However, defaulting your payment will impact your credit score and history. You may take between 1 year and 7 years to pay off a personal car loan. And, often, lenders will not give you beyond £25,000. You can even get loans with very bad credit to finance your car.
Personal Contract Purchase (PCP): You have the option to take up a personal contract purchase. In this case, what you have to do is to put down a deposit and make monthly repayments. The higher your initial deposit, the less your monthly payments will be.
Owning the car at the end of the contract period depends on if you were able to complete the payment. You will usually need to pay more (called a balloon payment) at the end of the period to become the legitimate owner of the car. You can choose not to complete the payment and return the car. Or exchange it for another car with the same dealership.
Hire Purchase: Hire purchase is closely related to PCP, but may offer a better option for some people. With this plan, you pay an initial deposit to hire the car. Subsequently, you have to pay monthly deposits if you want to own the car. These deposits are arranged in a way that ensures you have completed your payment at the end of the period. The car belongs to you after depositing the final payments for it. The initial deposit is usually around 10% of the car price. But the more you deposit, the lower your monthly payments become.
Personal Contract Hire: A business that offers company vehicles to their employees may decide not to own those cars. In this case, they hire a car from a dealership and pay its depreciation value monthly as rentals. These cars will usually have a total mileage which they are allowed to cover by contract.
Conditional Sale Agreement: Like PCP, conditional sales agreement will usually have a balloon payment. However, the contract only allows you to complete the payment and own the car. You can’t return or change the car.
Who can get a Car Finance
Not everyone can get car finance. Under-aged persons cannot get car finance, which means that you must be well over 18 to be able to get one. Lenders also have their own specific requirements to be able to offer you car finance.
Other requirements include having a reliable source of income that’ll enable you to pay off your debt. If you can’t show that you have a steady job, lenders may be forced to turn you down, unless other factors are considered.
The mental state of a person also determines whether they’ll be granted car finance or not. You’ll be required to get a letter from a certified medical practitioner, who is vast in the area of mental health, to ascertain if your mind is fit to take out car finance. This will save the car company from sorry tales in the near future.
Being too old can also be a problem when taking car finance. A weak, old comrade will have a hard time getting car finance, even if he can afford it — unless he has a driver and a family member taking care of his concerns.
Additional care is taken by the car finance companies and lenders too so that they do not suffer any loss resulting from their negligence.
Bear in mind that you should always take car finance from a dealership or lender that is beyond your financial capacity. Besides, a rejection from a lender may impact your history and make other lenders sceptical about dealing with you. If you’re taking a car finance loan, check that you’re eligible for the loan before you apply.
How to apply for a car finance loan
It really does not take so much to apply for a car finance loan. The steps are general for anyone who wants to take a loan: your contact details, home address, income details, employment, and expenses.
In addition, you will have to state the amount you want to borrow and how long you need to pay back. You can apply in person, through emails, websites, phone calls, or a postal order. If you are looking to put down a deposit you can go for £100, £200 & £ 500-pound PayDay loans as the money can be in your account the same day.
Where to find Car Finance
Finding car finance can be a bit of a hassle if you are not properly guided. Car finance deals differ with the car you want to buy, the company that is offering you a loan, and your financial condition. You can deal for new cars, fairly used cars, and well used cars.
Here are some places to get car finance deal from:
BuyaCar offers over 50,000 options of cars — used and new — to suit your needs and personality. You can check through their website for car brands like Volkswagen, Honda, Nissan, Ford, Peugeot, and lots of others. You can choose by brand or by body design.
When you’ve decided which car you want to buy, go ahead and apply for finance. Make an initial down payment to secure the car, then put in an application for low-rate finance. BuyaCar helps you to get the right financing for your car. Subsequently, they deliver your car to your home.
It takes about 10 for the procedure to be concluded and your car to be delivered. If you have any issues with the contract, you have a 14-day period to return or address the issues.
CarFinance247 offers a 5-step process to getting your car. They have over a hundred car types that you can choose from. Begin with getting a quote from a soft search that has no impact on your credit history. With their help, you can find lenders that offer APR rates as low 6.9%.
Use the CarFinance247 calculator to know how much loan you can get for a car. This will guide you to choose the right car. They’ll carry out the necessary checks and ensure that you get your car.
Uk Car Finance offers you access to car dealerships even without an initial deposit. Their representative APR is stated at 13% and you can begin your application process online. With their car finance contract, your dealership is sure to offer the car you want hassle-free. The conditions for financing will depend on your personal circumstance.
Hitachi capital is a UK finance company that offers a number of financial solutions including motor finance and personal loans that you can use to get a car. If you prefer to get a car with an unsecured loan, Hitachi finance will help you take the right loan. You can complete your application on their website and get your loan.
Zuto helps you get a hire purchase financing to buy a car. The company specializes in ensuring that you get a loan, even if you have a bad credit. You’ll have to fill their eligibility form in order to get possible quotes for your situation. For bad credit, you will get APR beginning from 34.9%
AA loan is an intermediary between lenders and the Bank of Ireland. You can get a loan for an APR of 8.9%. If you’re looking for a personal loan to buy your car, this is a good finance place to check. Be sure to compare their rates with other lenders before you make your decision.
Carzu offers car hire loans for many brands that include Hyundai, BMW, Nissan, and others. The process is simple, beginning with a search through their website for the available car deals. They help you to arrange finance once you apply, and let you know when the car is available for pickup.
Halifax bank offers you two car finance options to choose from, along with several quotes to help you make a decision. You can take a personal contract purchase or a hire purchase from their plan. Choose from their selected dealerships to enjoy the services offered by this bank.
MBNA personal loan offers you up to £25,000 which you can use to get a car. The process is fast, and you can get your loan in a matter of minutes. They’re one of the few lenders that allow you to make a lump repayment, if you decide to, without extra charges. They’re great for persons who prefer to take unsecured loans.
Post office is a broker for Bank of Ireland. They offer personal loans with a representative APR of 8.9% and a maximum APR of 29.9%. You can use the loan to solve a number of financial problems, including buying your car. The rate you are offered will depend on your circumstance and credit history.
Frequently Asked Questions
Can I buy any car in my car loan?
You can buy any car with your car loan, depending on the contract you have with your lender. certain car finance permits you to only buy used cars. Others may be specifically for new cars. Some lenders indicate that you can buy any car, as long as you buy from their approved dealership.
Will I pass a credit check to get car finance?
You will pass a credit check before your lender can approve your application. The credit check helps them to determine if you are eligible for car finance according to their terms. Some lenders do not approve financing for persons with bad credit. In addition, a car finance credit will impact your credit history. Therefore, it’s important that you don’t apply to more than one at a time.
Do I need to put down a deposit to get car finance?
In most cases, you need to put down a deposit to get car finance. Most lenders take it as security that you are committed to the project, and that you can afford the loan. However, you’ll be able to find lenders that offer no-deposit car finance. You will be given a period of time to make your first deposit.
Can I get car finance with bad credit?
You can get car finance with bad credit, but your options are limited. Most lenders avoid bad credit with car financing. Nonetheless, take your time to search around and ask questions. Some brokers can help to connect with lenders that take on bad credit.
How much will I pay for car finance?
The amount you pay for car finance depends on a number of variables. They include:
- the amount of loan you take
- your initial down payment
- fees associated with your borrowing
- the interest rate on your loan
- your credit score
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