Smart Guide to Car Finance Loans
Buying a car, whether used or new, is a serious expense. It's not like shopping for clothes where you just spend a few bucks. With a vehicle purchase, we are talking about thousands of dollars hence the need for careful and thorough consideration.
When buying a car, it's not just the brand, model and type of car that you'll have to think about. You also need to consider how you'll finance it in the first place. After all, there's no car if you cannot afford it anyway.
Getting car finance loan is one of the more popular options for many people. If you're planning on applying for one yourself but you don't know where to start, below is a smart guide about the financing.
What is car finance?
If you cannot afford to buy a car upfront with cash, car finance is an excellent means of raising the money needed. Car finance, in essence, is what exactly its name say. It is a type of financing offered to customers to help them buy their car without emptying the bank account.
In general, car finance options offer to lend customers loan amounts of up to £25,000. You can decide how much you need but it will be mainly dependent on your income and how much you can afford. Most car financing runs for 3 up to 5 years and interest rate varies from provider to provider.
To compare car financing options and other types of loans according to interest rates, terms and loan amount, Money Co UK is a great comparison site to start with.
What are the requirements?
When applying for a car finance loan, you have to be 18 years old or above and a resident of UK. You also need to provide proof of income. It doesn't matter if your fully-employed, working part time or self-employed. As long as you can prove that you can handle the monthly payments for the duration of the loan, you are qualified to take a car financing.
What are the advantages?
One of the biggest advantages of a car loan is the opportunity to buy the car that you want without paying for it outright. Seeing that most people do not have a lot of cash sitting in the bank, car finance becomes a great solution for numerous car buyers.
With more providers offering car financing, applying for one has never been faster and easier as today. Once the documents are cleared and your application approved, you can come over and get your car immediately.
How about the disadvantages?
While car financing has its perks, it also comes with some disadvantages. At the top of the list is the fact that your car depreciates over time. In fact, the moment you drive out of the dealership, the value already drops by maybe 20 to 30%. By the time you finish off paying the loan, the value is already significantly lower.
Though it may the easiest way to finance a car, a loan is not always the cheapest way. Interest can be high if you don't know where to look so take extra caution when looking for a provider.
Is it for you?
Now that you've understood the basics and considered both the advantages and disadvantages, it's time to decide if a car finance loan is for you. As a general rule, it should mainly depend on whether you can afford the monthly payments for the loan.