There are three main options when it comes to getting finance for your new car.
- Unsecured Loan this type of loan will not be secured against any of your assets.
- Secured Loan the balance of this type of loan will be secured against an asset such as the car or even your house.
- Dealer Finance dealers can offer a number of finance options including hire purchase and lease purchase agreements.
What are Loan APRs?
Loan APRs are one of the most common forms of credit products available and are quite easy to understand. APR stands for annual percentage rate and this will set the price at which the money lent to you will be charged. This will also take into account any insurance and fees attached to the car loan. It is important that you double check the APR on any loan, whether it is secured or unsecured before you sign any agreements. You also need to check if the APR quoted is set at a fixed price. This will help you to understand exactly what you will need to pay back on your loan. If the APR is not fixed then the interest rates could rise and this could see you paying back much more on the loan than you expected.
How Can I Get the Best APR?
Most consumers have a credit report and this lists their payment performance history. All of the credit products you have applied for will be on this report and you will be given a credit score based on this information. Lenders will access your credit score in order to judge what type of borrower you are. If you have a very poor credit score then you will be seen as a high risk borrower and this could mean that lenders may decline your applications. If you just have one or two poor areas black spots on your borrowing history then lenders may still be willing to offer you a loan, but may not consider you for the best low rate APR deals. The best way to get the top loan deals available is to make sure you manage your credit products well and meet all of your monthly repayments. This will give you a good credit score and ensure that lenders see you as a low risk borrower.
How to Calculate Your Loan
To help you calculate which loan is best for you there are some helpful online tools available. Carloanadviser.co.uk offers a loan calculator on their website that can allow you to quickly and easily work out which type of finance is best for you. All you need to do is type in the amount you want to borrow and then what APR you have been offered. You will also need to input the loan duration. You can then get a breakdown of the loan at just the click of a button so that you know exactly how much interest you will have to pay overall. Although the interest charged will depend on a number of variables, such as how much you want to borrow, on what type of car and over what length of time.