THE CURRENT ECONOMICAL CLIMATE means not many people who buy cars pay the
whole amount outright. In fact, according to the latest research, even those
on a comfortable income are less likely to accumulate money in their bank accounts
— mainly because the banks offer ridiculously low savings rates.
Now, more than ever, car finance
is considered the most convenient way to own a car here and now. According to
the stats, 7 out of 10 people will apply for finance to get their hands on the
car they desire; and this proportion has a tendency to increase.
“Applying
for car finance
is easy as ABC
but there are some
considerations that will
make the whole
experience easier...”
Applying
for car finance is easy as ABC but there are some considerations that will make
the whole experience easier.
One thing that you always have to think about is the APR, the annual interest
rate you pay on the loan. Some new cars do come with 0 per cent APR and it is
a finance option provided by the manufacturer. It is common to find 0 per cent
or very low percentage APRs on many new car deals. The reason for this is that
the manufacturers have a big enough profit margin on the cars to offer low finance
rates just to sell as many cars as possible.
It is different with used cars. If you are looking for a second-hand vehicle,
you'll have to use a lender who agrees to lend you money at a certain interest
rate. In this case, the APR is determined by several factors — mainly by
your credit rating. Customers with an excellent credit rating can expect the
APR to be as low as 7.9 per cent or slightly over 8 per cent. Customers with
squeaky-clean credit profiles are a rarity. Most of them will fall in the category
of good or average credit rating. The APR for this particular customer group
is in the region of 12 to 15 per cent, which is still a good deal.
So if you want to get a favourable rate, the best bet is to keep your credit
rating clean. A few tips how to do this:
• Always keep an eye on your bills. Pay them
in good time, or better yet set up a direct debit so that you never forget to
pay your bills
• Make sure your name is on the electoral
roll
• Create your monthly and yearly budget and
stick to it
• Keep your identity safe and don't fall prey
to identity theft.
The best way to get a good car finance deal is to shop around. Visit several
broker sites and fill in the applications. Then just go for the best deal. Many
used car dealers offer their own finance options, however, and that doesn't
always mean that they are offering the best deal out there.
Before you sign any papers, make sure the car finance company you're dealing
with is accredited with the Financial Services Authority (it should be indicated
on their website); and also be sure that you can really afford the car you've
chosen.
As part of the normal application process, the lender is obliged to check if
you'll be able to meet your monthly repayments, based on the data you supply,
but it is always a good idea to have a reality check. Any problems with your
finance arrangements may adversely affect your credit rating and the possibilities
of obtaining credit in the future.
Overall, many people find car finance to be a great option that enables them
to own a car. Thanks to the low interest rates and easy monthly repayments,
it is by far the easiest way to get the car that you really deserve.
