Car Loans Driving down the cost of car finance

Determining How Much Money You Need to Borrow: How much to borrow is always a key decision. This article gives some good general advice
Use Bad Credit Home Loan To Get Funds Despite Poor Credit Ratings: Bad credit loans can be expensive. This article provides some useful advice
How Your Credit Rating is Determined: Your credit rating is important. This article explains how credit ratings work, their effects and what to do if the score is based on incorrect information.
Adverse Credit. When is a credit history described as adverse ?: When do have an adverse credit rating? The situation is far from clear but this article sheds light.
Car Loans Drive down the cost: Usually the cheapest way to finance the purchase of your car is usually with a personal loan. But there are other methods. This article explains.
Payment Protection Insurance, what's all the fuss about?: Payment Protection Insurance has been getting a hammering in the press lately. Why and is PPI a good idea? This article investigates.

Life Insurance News

makes and models of car before deciding what to buy. Then four out of ten sign up for the car within 30 minutes of stepping inside the showroom.

But will their diligent research extend to finding the cheapest source of finance? It seems not. Almost 50% of new cars bought privately are bought on finance and nearly 20% ( cheap mortgages ) sign up for the finance deal offered by the manufacturer. That could turn out to be a costly decision. With manufacturers finance typically costing 13.7% over a 3 year including a 10% deposit, they could be throwing about £1,800 down the drain.

Someone buying a Renault Megane Sport Saloon Privilege costing £16,000, would end up paying £17,384 over the full 3 years. However, if you have a ( pet insurance ) good credit history, you could get a personal unsecured loan at only 5.5% and end up paying just £15,631 - that'll give you a saving of £1,753. This illustrates that accepting the showroom's finance instead of shopping around for a low rate loan, can hit your pocket hard - its like giving back the discount we hope you negotiated!

I can hear you telling me about the special finance offers that the manufacturers advertise extensively. Yes there are some good deals but always look closely. Some only relate to specific models and specific specifications, often the cars that the manufacturers are having trouble shifting, and some deals have stings in their tails. Take ( medical insurance ) the current offer on the Volkswagen Polo E2. This deal is advertised at 5.8% with a monthly repayment of £99 over 35 months - but at the end you'll find you have to make a final balloon payment of £3,750 or trade your E2 in for another Volkswagen.

The manufacturers offer these deals to encourage brand loyalty and a repeat purchase in 3 years time. They know that most people will trade their car in after 3 years rather than find the large balloon payment.

Of course, manufacturer's finance and cheap personal loans are not the only way you could finance your car.

Hire purchase is the traditional way to pay for your car. Here you pay a ( loans ) deposit usually of at least 10% or trade in your existing car for at least the same value, and then your HP loan for the balance, is secured on your car. Therefore, in practice your car still belongs to the hire purchase company until you have made your final monthly payment.

If you want to sell your car before you've completed the HP agreement, there will almost always be an early redemption penalty - often two or three months interest. ( motor insurance ) The HP company will always register its interest in your car with HPI the finance tracking agency. This will effectively mean that you will not be able to sell the car until you have paid off the balance of the HP you owe.

Click here for part 2