UK car loans finance for beginners

Most car consumers today do not have cash for purchasing a car and have to depend on UK car loans providers for purchasing the car of their dreams.

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Car loans might seem to be very complicated to those who have taken an auto loan before. UK car loans finance is easy to understand.

UK car loans finance can be availed from a number of different sources today like through a dealer, broker, an online loan company, a bank, credit union etc.

However, car dealers will not provide the loans themselves but they will arrange the finance on behalf of the customers through a finance company or a bank that they deal with.loans girl pic

UK car loans finance might be difficult to avail for first time buyers if they do not have an established credit history with them.

Also there might be some difficulty if they do not have a job history, have low income and do not have collateral to offer.

The easiest solution in such a case is to get a family member to be a co-applicant for the UK car loans. In this case, the co-signer will be the responsible individual for the loan.

UK car loans finance are based on four main components which are as explained below:

  • Loan amount- the banks and the finance companies will decide how much they would be willing to advance to the borrower based on the price of the car to be purchased and the ability of the borrower. In many cases, the loan amount approved by the financer might not be sufficient to pay the cost of the car. In such cases, the borrower will have to pay the difference.
  • Interest rate- interest rates are charged on the loan amount borrowed by the borrower. The rates charged on the loan will depend on the policy and the rate structure of the company, whether the car is new or used, the credit score, the term of the loan and various other factors. For shorter loans the rates would be higher.
  • Term- the term of the loan is the number of months for which the loan is borrowed. For fist time purchasers the financers would generally provide a longer loan term in order to give them a very low monthly instalment.
  • Monthly payment- the payments to be made every month on the car loans can be calculated using an online loan calculator. This monthly payment would depend on the loan amount borrowed, the rate of interest charged and the term of the loan period.

Generally, for loans with higher loan term the instalments would be lower and vice versa.

This was some basic information on UK car loans finance. It is important for first time car buyers to do some research in order to find the best possible loans for their first car purchase.