Car Finance – Best Car Loans Compared
Get the cheapest car finance for your next motor, with the top deals compared below.
Compare the Best Cheap Car Loans Online
Here are our hot picks from the hottest car finance deals available at the moment. Suitable for small, medium and larger car loans.
About Car Finance
Most of us don’t have the cash to pay up front for the car we want, so what do we do? We get a loan. Not all loans are alike though, so it’s important to shop around and make sure that the loan you accept is the one that’s right for you, and that you get the best deal possible on it.
We can help.
Shopping Car Loan Deals
It’s always an emotional experience buying a car – a little exciting, and a little nerve-wracking too. Getting a loan to buy the car? Well that’s mostly just nerve-wracking, and can even be a major source of stress. Because of this, we tend to spend a lot of time researching for the car we want, we look over the details, read reviews, and check several makes and models until we find the best one for us.
Then we take the first loan that’s offered.
As difficult or tedious as it can sometimes be, we need to take similar care in purchasing our loan as we do when buying the car. Our comparisons can help. We’ll not only help you find the best product to suit your payment and term needs, we’ll also help you get the best deal. There’s no point in wheeling and dealing for the best price on the car if you’re going to lose all of those savings by purchasing a poor value loan. A poor loan choice can add hundreds or even thousands to the cost of your vehicle.
What should you look for when purchasing your next car on finance?
You’ll want the cheapest loan possible, but you’ll also need to be able to afford the monthly payments. Unfortunately, the cheaper the loan, the higher the monthly payments tend to be. You’ll need to find a balance that works for you.
First, decide on what kind of monthly payments you can afford. Make them as high as you can comfortably go, but not so high that you’ll have trouble paying them – a missed or late payment can cost you in other ways, and isn’t worth it.
You’ll need to work out how much money you could get at that monthly payment – and that depends on the period of time you take to repay the loan. A mortgage broker or loan officer at your bank can help, or there are several online calculators. The longer the loan period, the more expensive the loan will be – because you’ll be paying interest for that many more months. A longer period will, however, help you to have a smaller monthly payment. If you’re buying a reliable car that you plan to have for a long time, it makes more sense to carry a longer loan period. You’ll be able to keep your monthly costs down, and still get enough to buy a good car. Keep in mind though, this will be more expensive in the long run.
It is also important to shop around for the best interest rate on offer. If you have damage to your credit rating, you will probably still be able to buy a car, but your rates will be higher, and the loan amount offered may be lower. Interest rates result in amounts that may seem small, but when each monthly interest payment is added up over the full period of the loan, this can mean hundreds or thousands of dollars in interest alone. It is as important to keep this cost low as it is to get a good deal on the car itself.
Find out what the initial deposit is (if any). Making a larger one will save you money in two ways. First of all, it may allow you to get a better interest rate, as you’ll be taking on some of the risk from the bank. Second, buy paying some of the cost of the vehicle up-front, you’ll need to borrow less, so you’ll save on interest and make fewer payments overall.
If it is not an outright sale, make sure you are aware of any mileage charges associated with the car. If you are limited to a certain amount per year, make sure it suits your driving habits. Over-mileage charges can be expensive.
Types of Car Finance
Here are the most common types of finance that you can get for your new car.
Hire Purchase (HP) plans allow you to use the car for the period you are making the payments, then you own the car when the payments are done.
If you miss payments, the provider can take the car back without providing any refund to you. If you have paid off more than a third of the total owing, then a court order is required for them to repossess the vehicle, but if less than that has been paid, they can simply take it. In most cases, though, providers are willing to work with you if you have a temporary problem or have made an error.
A repossessed car is sold at auction and the money applied to your debt. If it is not enough to cover the debt, you may be liable for any outstanding amount, plus fees.
You will be able to drive an HP car from the time of first payment, but you are not allowed to resell it until the provider has been fully paid.
Cheap Personal Loans
If you are able to get a low-rate personal loan, you may save money over an HP agreement. It is not only cheaper, but gives you the option of selling the car before you have finished paying it off, if your circumstances change and you are no longer wanting to carry the cost.
Loans of this kind – at least the low-rate ones – generally require the loan to be between £7500 and £15,000, so if you are looking for a vehicle that is less than this amount, or more, you may not get the best interest rates. They might still be better than HP rates though, so it is worth doing a careful comparison.
Low interest / 0% credit cards
If you are in the market for a cheaper vehicle, or have the cash on hand to cover most, but not all of the cost, a 0% credit card might be a great option. Some of these cards offer an introductory period of 0% for several months. This would allow you to make the car payments directly to your credit card, thereby avoiding all interest – IF you’re disciplined enough to keep up with the payments. If not, and you carry an amount past the 0% interest period, you may then incur very high interest rates and lose any financial advantage you may have gained.
Leasing or Contract Agreements
Leasing a car (often referred to as a Personal Contract Hire (PCH) agreement) is similar to renting it long term. It has the advantages of being cheaper with regard to monthly payments, allowing most people to get a much better car than they would otherwise. The difference is that it often comes with a large up-front payment. This reduces the risk carried by the provider, and that’s why they can give better rates and lower fees.
When the agreement period is over, you are required to return the vehicle to the provider, or negotiate a renewal or purchase agreement. There are normally annual mileage limits, and you will be charged for any miles in excess of these limits, and for any damage to the vehicle.
A variation of this is the Personal Contract Purchase (PCP). This is similar to the PCH, except that you can either return the car, use it as a part exchange on a new PCP, or buy it outright through a single “balloon” payment. If you buy it outright, the price would be determined using a pre-set formula included in the original agreement.