23 Mar How to apply for a car loan
Choosing the right car loan
Buying a new car is never as straight forward as it sounds; there are many things to take into consideration when it comes to buying your ideal wheels!
If you are buying your car from new, it may be that the dealership will offer you a finance option. This means that they will essentially lend you the money and you will make repayments to them on a monthly basis until the car and the loan is paid off in full. Sounds an easy process right? Wrong.
Many dealerships will often charge a slightly inflated interest rate, meaning that your loan will be repaid at a premium price. Dealerships will prey on the fact that getting a loan with them will be 10 times easier than going elsewhere to get a loan, which is why they charge more in interest.
Taking out a loan to buy a car is a very common thing, in fact nearly everyone that buys a car will take out some form of finance in order to be able to afford it, it is very rare that someone will actually buy a car outright from day 1.
What is a car loan?
When looking to take out a car loan you will be asked a number of questions such as your monthly salary, outgoings and all the other personal information that comes with a loan application.
Treat a car loan just like any other type of loan, you will be asked the same questions, you will apply in exactly the same way, the same credit checks will all still apply to you. Nearly all direct lenders will allow you to use a loan to buy a car; the loan does not specifically have to be labelled as a car loan.
When it comes to applying for a car loan it is important to do your due diligence on all direct lenders in order to ensure that you are applying with the lender that can best match your needs. You can choose to either apply with a company that specifically deals with car finance and loans, or simply apply with a lender that will allow you to borrow the exact amount needed in order to purchase the car.
Where can i apply for a car loan?
Instead of applying with one direct lender, we would recommend using comparison websites in order to compare the different options available to you from a host of direct lenders. Remember, using a comparison website will display all the lenders that are likely to accept your loan application based on the criteria you have entered in the application form, you can then choose which lender to go with.
By using a UK Loan comparison website such as luckyloans.co.uk this ensures that if there are any credit checks, this is limited to one. Whereas if you apply with a whole range of direct lenders individually, this could result in multiple credit checks and as a result, hurt your credit score.
If you are approved for a loan, you can still reject the loan offer at this point. It is essential that you read through your loan agreement form to see the monthly repayment, interest rates and the total amount repayable will be to ensure that you are able to afford your loan. If you feel comfortable with the repayment terms, it is time to sign on the dotted line.
Once you have been approved for a loan, your loan will likely be transferred to you on the very same day, or next working day depending on the size of your loan. You will then need to pay the money for the car directly to the car dealership which will mean the car is yours!
It is also important to keep your car in the best condition possible to maintain the cars future value should you ever wish to sell it. If your car is in better than average condition for that particular make and model, this could enable you to sell it for above market value, which can help you either repay your loan or use the money for a down payment on another car.