Getting your first car loan in the UK
If you are buying a car for the very first time, chances are that you will finance it through a car loan. The good thing is that the credit industry, especially the auto finance industry is a vibrant one. This said, there are some very useful tips that will stand you in good stead as you try to get the money for your machine.
Consider the type of car you want – The type of car you want to buy can greatly affect your chances of getting a car loan. Most loan providers do not offer credit for used cars, especially for cars over five years old. Those that finance used cars will usually charge higher interest rates as they are considered to be risky. It is easier to get a car loan for the purchase of a new car.
The amount of loan you need- You should know the exact value of the car and then decide how much help in the form of a car loan you will require. You should be careful to know the true sticker price of the car as this is where most new buyers are ripped off by dealers. First you should find out the invoice value or the price at which the dealer bought the car from the manufacturer. You should get this information independently from the dealer. This should help you approximate the sticker price, the price at which the dealer should be selling the car. Knowing the approximate price of the car will reduce the chances of being had by connish car dealers.
Try to get good credit history – Credit history goes a long way in determining whether or not you will get a car loan. As a first time buyer you probably do not have a credit history to write home about. You will therefore need to do some planning in advance to get some sort of history before you have to apply for the loan. A good credit history may not be absolutely necessary to be eligible for a loan, but it will make it easy to get a car loan at a lower interest rate. An easy way of establishing good credit history is by opening a checking account and not overdrawing it or having credit cards that are paid on time.
You should shop for the most viable source of a car loan for you. There are several places to look to for a car loan.
The dealership – Most car dealerships offer car loan facilities to their customers. This is mostly from a pre-arranged agreement with particular banks.
Auto-creditors – These are financial institutions that deal specifically with car loans. Their advantage is that their products are tailor-made for cars and therefore friendlier.
Banks – Banks generally offer car loans as part of their loan portfolios. Their disadvantage is that they are not tailor-made for cars.
Your employer – Many employers offer car loan as facilities as benefits to their employees. These loans tend to be friendlier and have lower interest rates. However, there is taxation on this benefit.
Hire purchase -This is an old time favorite type of car loan for car buyers.
It is a good idea to save so that you are able to put a down payment for your car. This helps in reducing the loan burden. Most financial institutions or car loan providers will ask for a down payment anyway.
