Where to find the Lowest Interest Car Loan

If you are buying a car then the chances are that you will need to borrow money in order to do so. Many cars are too expensive for most people to afford without having to borrow the money to pay for them. This means that a loan is likely to be the only option for many people. Finding a loan though is not always easy and it is important to find the right loan for you.

Low Interest Loans

Many people will immediately start searching for the loan that has the lowest interest. This is because they will feel that will be the best loan for them as they think that it will be the cheapest. It is important to not only be aware that the lowest interest may not be the cheapest but also that it may not offer the best value for money.

Car Loans

A car loan is usually offered by a garage or dealer specifically for buying a car with. It is a very convenient way to borrow money as the dealer will know what you need to borrow and can help you set it all up. Sometimes the dealer will even give you a better rate on the car if you take their finance deal. You may even find some dealers that offer interest free credit.

You may be paying for the convenience of a car loan from a dealer though. If you compare the rates of car loans with loans that you can get elsewhere, you will often fond that the rates are higher, meaning that it is more expensive to get a loan from a dealer than a bank. It is important to check this carefully and compare like for like. For example, do not just look at the advertised percentage rate as there could be other costs and how long the loan is for with also be a factor. It is much better to either compare the AER which is a percentage that includes fees or find out how much you will repay during the term of the loan. Then you can compare them properly and see which will actually be the most expensive for you to take out.

You may see an interest free loan at a car dealer and feel that this is the best deal and that you should get a car from them because of this. However, you should be really cautious if you are considering doing this as it may not be as good as it looks. Firstly, the cost of the finance will be included in the cost of the car. If you compare the price of the cars with those at dealers that do not offer free finance deals, you are likely to find that the ones being sold at the dealer offering free finance are significantly dearer. Even if they are not dearer there may be other costs that are higher. For example, if you miss a repayment on the loan, you will get charged and this amount will differ between lenders. You may think that this will not matter because you intend to repay your loans. This is great and you need to do this, but it is wise just to check how much this will cost you so that you are prepared and it may help you to decide between lenders as well.

Alternative Loans

It is possible to use a personal loan to pay for a car. It can be worth looking at these and any other loans that will give you enough money, to see if they are cheaper. You may find that you will be able to get a better deal, perhaps from your bank or another financial provider. It is good to compare a lot and see which looks to be the best. You may find that for some loans you will need to use your home or car for collateral, but with a car loan through a dealer you will normally have to use your car as collateral anyway.

Make sure that you check, as mentioned before, exactly how much you will be expected to repay so that you can calculate how much the loan will cost you in monetary terms. This will allow you to compare them properly and work out whether a car loan will be better or whether you will be better off using a different type of loan. It will take time to do this comparison, but it will be worth it. You could save a significant amount of money if you take a bit of time to do the research required. It could make a big difference, even if your repayments are a little lower each month, it will enable you to be able to save some money and find the repayments easier to manage.

Who payday loans are for

It can be easy to dismiss the idea of getting a payday loan for a number of reasons. One main reason could be that you do not think that they are for you. It is important to understand who payday loans are designed for so that you can decide whether you might fall into any of the categories and whether therefore, you might consider them at some time.

Poor Credit Rating

Payday loans were first set up for those who could not borrow money elsewhere. It was seen that those that had a poor credit rating were unable to borrow money from anywhere and it was felt that they should be given the opportunity to do so. Therefore, payday loans came about so that anyone was able to borrow money, even if they had a poor credit rating. This could be seen as making borrowing more inclusive to all and enabling those that could not get a conventional loan the opportunity to borrow without having to resort to illegal lenders. However, there is no rule that if you have a payday loan you have to have a poor credit rating. No credit check is done which means that they are available to anyone regardless of their credit rating.

Need Money Fast

Payday loans can be arranged very quickly. Some lenders will get the money to a borrower within a few hours and this will mean that if you need money for an emergency then it will be there for you. Sometimes this can even be done overnight or over a weekend – you will not always have to wait for normal working hours. If you apply for other types of loans, the application process can take weeks and so you may not get the money on time if you rely on these. So whether you need the money in a few hours or a few days, then this can be a better option than waiting for applications to go through for other types of lending.

No Other Options

It may be that you have used up all of your short-term borrowing options. You may have a maxed-out overdraft and credit card and therefore cannot use these. Applying for another card or an extension to your credit limit can take time and may even be refused and therefore a payday loan can help in this situation.

Restrictions

There are a few restrictions on who payday lenders will give money to. As with all UK lenders you have to be resident in the UK and be over the age of 18 and have a UK bank account. You will also have to have an income and be able to show when you get paid. This may not necessarily have to be a salary though, but you will need to have regular payments. Lastly, you will have to be able to prove who you are by using documents such as a driving licence, passport or utility bill. This may seem like quite a lot of conditions, but actually they are far less than with  most lenders who would want to do a credit check and possibly even see if you have any collateral for backing a loan.

As you can see, it could be that a payday loan will be an option for anyone. If we are in a situation where we need money quickly, have used up our credit limit or have a poor credit rating, then we could find that this is the only option left for us. No one wants to have to borrow money, but if we really need it then this could be the only option available.

It is wise to be careful though, as with all forms of borrowing. There are some features specific to payday loans which you need to be aware of

 With a payday loan you will only borrow the money for a few weeks; until you next get paid. This means that you will need to find the money to repay the loan very quickly. This can be great, as it means that the loan is cleared really quickly and as you repay the money on your payday you should have money available. However, if you have other bills going out that day and an overdraft, then they may not be money left I the account to pay the loan off. Also, even if you do pay it off, you will be short of money for the rest of the month. This means that you will need to budget really carefully. You will need to make sure that you can manage to pay everything that you need to and this might mean really cutting back elsewhere and perhaps looking for ways to earn more money too. This can be tricky in such a small space of time but it could be necessary in order that you can manage.

Top