Car Finance @ loans UK

Deciding what car you want is easy, but sorting out how to pay for it is often a more taxing matter. Don’t worry; we take the frustration out of financing your next new car.

You’ve set your budget and decided on a nice new car. It all looks so easy, but be careful not to get caught out and end up paying out more cash than you’d bargained for. With the correct information, acquiring and owning a new car is easier than you think. We guide you through the main ways of getting that shiny new motor.

LEASING
If you like to switch cars on a regular basis, having money tied up in it could be bad for your savings. Frequent chopping and changing will see you lose a chunk of cash each time you sell on.

The knowledge:
A popular method, especially with many company car schemes, leasing options are not dissimilar to long-term rentals. You agree a set lease period, agree to a mileage limit and add in any fixed price servicing deals. Exceed any mileage limits and you might have to pay a penalty. You’ll need to put down a deposit before paying any instalments. At the end of the lease you can walk away or start again. The major benefits are flexibility, having all the service costs taken care of and the prospect of a new car at regular intervals. The car is never yours to keep tough.

What’s good: depreciation-proof
What’s bad: car is never ‘yours’; VAT is payable
Verdict: a good bet for businesses and the self-employed

HIRE PURCHASE
Hire purchase or ‘HP’ is traditionally the most popular way to buy a new car. The car dealer usually arranges credit on your behalf with a dealer-approved scheme.

The knowledge:
Negotiating a good deal can be complicated as factors include length of loan, size of monthly payment, loan interest rate, any discounts plus the part exchange value of your old car. If you encounter problems with the new car, returning it isn’t always straightforward. Dealership and finance company rates are not always the most competitive.

What’s good: easy to set up, the dealership can do it all for you
What’s bad: car isn’t yours until final payment is made
Verdict: would suit buyers lacking the funds for an outright purchase

PERSONAL LOAN
Similar to hire purchase in some ways, a personal loan is arranged between yourself and a lender such as a bank or building society. You’re then free to haggle with the dealer once in possession of a lump sum of cash.

The knowledge:
Unsecured loans tend to command higher than average interest rates. The personal loan route allows you to shop around for a more competitive rate and favourable loan periods. Likely to be more competitive than a loan arranged directly through the dealership.

What’s good: you own the car from the start of the loan
What’s bad: interest can add considerably to purchase price
Verdict: would suit buyers with time to hunt around

PERSONAL CONTRACT PLAN
Arranging a Personal Contract Plan or PCP is a popular way to buy a new car and the manufacturers often have a number of schemes tailored to buyers’ different circumstances.

The knowledge:
A typical PCP customer chooses a car, decides on a period for the plan to run and estimates the annual mileage they expect to cover. The guaranteed minimum value (GMV) for the car at the end of the plan is then calculated. That’s subtracted from the purchase price and what’s left is what you pay. Instalments are paid monthly plus the interest. However, because the total amount ‘borrowed’ is small, payments are usually low. When the PCP period id up, you can walk away, start from scratch, pay the GMV and keep the car or sell it if you think it is worth more. Some schemes allow you to start again using your ‘old’ car as capital.

What’s good: low monthly payments
What’s bad: real value of GMV can vary
Verdict: would suit buyers who prefer small monthly payments.

Welcome Car Finance is part of Welcome Financial Services offering the cheapest typical APR in the marketplace, and are the UK's leading provider of car credit, personal loans, secured loans and hire purchase credit

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Need a Car. Can't Get Credit You'll find we're experts in providing car finance for most people regardless of their credit history. Bring in your old car to us and if you are accepted, we'll give you £1,000 minimum part exchange for any car you swap no matter what the condition, even if it¹s failed its MOT

About UK Car Loans

A car can be one of the more expensive purchases in life yet when making that expensive purchase many people still take a long time to consider the car they will buy but give little thought to the finance that is attached to the purchase. It is natural to negotiate the best deal you can get when buying a car. A better deal may mean that you can get a higher model or walk away with money in your pocket. But do you also look for the best car loan deal as well. Surely saving money on the financ would also help towards that better car.

Certainly check out the car loan offered by the garage, it may be a good deal, on the other hand it may not. You might not even be able to tell where one arrangement ends and the other begins. You may find that if you had arranged the finance before you entered the garage you would be equal to a cash buyer and therefore have been a very attractive customer to the garage.

Some lenders are willing to look more favourably on car loans and give preferential treatment. It is therefore worth looking at those lenders who specialise in this area. Also check out other lenders as well. Just because someone says they specialise in an area does not always mean that they will give the best deal. Your interest should be in getting the best deal for you.

A car loan will be for a specific period of time. You need to bear in mind the price range you want to pay for the car you need, and the time you expect to keep that car. If it is only for a short time, then how much use will you give the car and what price might you get when you finally sell it. Ideally the car loan would be fully paid up by the time you want to change to a new motor. At worse it would be good to aim to be in a position so that the sale of the car would clear any remaining car loan amount.

Having considered how much you would like to borrow and the period over which you would like the car loan to be for, then consider if you can afford the car loan.

List down your regular weekly/monthly payment and then add to that the less regular payments such as annual insurance premiums, money for birthdays, holidays and Christmas. Add in an extra amount for unforeseen costs such as car repairs or a new set of tyres.

Now look at your income. Please remember that not all income is guaranteed or regular. Over time, tips and bonus can not always be relied on. Be reasonable in the figure you use.

Borrowing right up to your affordable limit is not recommended, you should always try to borrow below your affordable limit.

Lenders will assess your ability to repay the car loan when they consider your application. They will look at factors such as your credit history, your income, your employment status, and if that is not your main income source, then how you derive your income. Whether or not you own your own property or rent or share a home with someone else. How long you have lived at the same location.

Lenders have different criteria and so if you are turned down by one lender it does not mean that you will be turned down by every lender.