UK Car Loan
Your options for getting credit on a new car.
Getting a UK car loan is no longer an open-and-shut case. As well as the dealer in his pork-pie hat, you can now go to your bank, a supermarket, a specialist car credit dealer, or sign a part-purchase scheme contract. Which deal is right for you will depend on how much you (and they) value several criteria; namely the interest rate, your creditworthiness, fixed price motoring, deferral of costs, and ultimately whether you want to own the car outright at the end of the day.
The UK car loan marketplace is increasing in size all the time, not only because of a plethora of new players but also new products which give different groups of people more options on buying a car. This is because the value, price and longevity of cars is not only quite specific, but well known throughout the finance industry.
Garages themselves will often try to arrange you finance. These deals can be exceptionally good, but also demonically unfair, and this variance tends to put people off- certainly be sure to check the small print which can change from deal to deal. There are companies like Yes Car Credit, who make their money on the finance rather than the car they sell you; and whilst that's not necessarily a bad thing, you need to know whether you're getting value for money.
You have plenty of other options on a UK car loan. Everyone from your bank to your local supermarket will give you a loan for a car. Rates vary between 6% and 12% in general, and again be sure to check the APR. Ask for motoring-related benefits, for example free breakdown cover membership. A small number of providers offer specialised treatment of the loan itself- Halifax, for example, offer a deferred payment product, where the payback is weighted towards the end of the loan. This might allow you to obtain a nicer car than you thought you could. (Also for business purposes, it might let you buy a vehicle and then get your business up and running before you have to pay larger instalments back). The banks are usually at the less competitive end of the spectrum, but also often the most open-minded if you have a less than perfect credit history.
Finally, whilst here in the UK car loan rates are rarely different to standard loan rates, personal purchase scheme products have still increased in popularity. These allow you to effectively rent a car across a set period, after which time you can give the car back, pay off a final deposit (agreed at the start) or take out a deal on another vehicle. This will usually mean you have lower repayments across the term; but since you're paying off across the time that the vehicle depreciates most, the arranging company is invariably onto a winner. This is a good product for some customers, but if you can afford outright purchase then so much the better. The pill is sweetened by maintenance deals which can add full service and breakdown cover to the contract; in which case you have the benefit of flat-rate motoring with no nasty repair surprises. Again, if that fits your needs it might be a beneficial approach.