Car Finance: Is it the Right Option for You?
Financing your used car purchase with a recognized car retailer is another way of spreading the cost over monthly payments, over a handful of years – an alternative to using a high street bank directly for a loan, where perhaps interest rates aren’t particularly competitive. The interest rate comparison will tell you if car finance is the right option.
As a guide, this is what you’ll be looking for from the right car finance deal.
A Competitive Rate
With a used car retailer like CarShop supplying the vehicle, it can be an easier option to arrange the finance through them, too. Check with your high street bank as to the sort of personal loan finance rate they can offer you on the value of the car you’d like to buy, and then compare that to the car retailer’s finance interest rate. If there’s money to be saved with a competitive rate from the car retailer, then you could have already saved yourself some money on your monthly repayments.
Old Toy Car by born1945, on Flickr. This work is licensed under a Creative Commons Attribution-ShareAlike 3.0 Unported License.
Transparency
The car retailer will arrange your potential finance package through recognized financiers – like Lloyds Black Horse or Santander; familiar names from the high street – but with their extra group buying power, may well be able to get you a more favorable rate. They will approach the financier with your personal details and circumstances, the loan amount you need and the length of the loan repayment period, and from that the cost of the car loan can then be calculated. It’s the same process as using the bank yourself, but keeps the car purchase and the car loan under one retailer’s roof.
Speedy Application
A used car retailer regularly deal with financiers – some 50 million pounds of finance is arranged by them yearly – so the process of application should be quicker than starting from the beginning with your own bank. The sales staff at the car retailer should also be able to give you useful advice on the loan process, as well as on the car that you’d like to buy from them.
Of course, you are still applying for credit, so there are procedures to follow. A responsible car retailer will calculate what you can afford and for how long you should take the loan for – the longer the loan, ultimately the more you’ll pay in interest – and every calculation should be strictly based on your own personal circumstances and what you can afford. Car retailers that arrange finance will have direct links to credit scoring companies, like Equifax, to check your credit history and rating, and the cost of your loan – the interest rate and the amount of the deposit – will be based on your circumstances and credit history. A responsible retailer will be as transparent as possible with you about this process and your credit score at the end of it.
However, if things go smoothly, a financing proposition can mostly be given within 10 minutes, and you could well be in your new car quite quickly.
In short, taking out your car finance directly with a recognized car retailer can be a quick and painless way of getting you and your family into a new or used car, and with the best interest rate and payment scheme for you.
