subject: Using car finance to buy your car [print this page] Using car finance to buy your car Using car finance to buy your car
First things first
If you are thinking about buying a car, then the first thing you may need to think about is how much you can comfortably afford to pay out each month on car finance.
Next you may typically need to see what that monthly figure would allow you to borrow over a period of say three or five years. Add to this the value of your deposit or part exchange, if you have one, and in theory that's how much you could spend on your car.
Alternatively
You may already have seen a car you'd like and want to know if you could afford the repayments.
So you need to know what the monthly repayments would be if you borrowed that amount of money, again taking the deposit into account if there was one.
Online car finance
These sites typically provide an online car loan calculator where you can work out possible options before you take things any further. You don't have to rely on your bank manager or the car dealership telling you what you may or may not be able to afford.
Once you have an idea of what your budget is, you could then apply for car finance online.
Finding a lender
The online application may typically ask for details of your income and proof of identification like a driving licence or passport details. A credit check will be carried out.
Because online car loan sites have contact with a number of lenders, they may typically find you a lender suited to your own circumstances. They may also have access to lenders prepared to lend to you even if you have had credit difficulties in the past.
You may have a decision on your application in a couple of hours and you'll also be informed of:
the amount of the loan on offer;
the annual percentage rate (APR) determined in part by the strength of your credit rating;
the loan period;
the total amount to be repaid;
fees or charges applied.
The offer may be valid for a few weeks so even if you haven't yet found a car you still have plenty of time.
Finding and paying
Once you have found and agreed the deal for your car, you may need to provide details of the registration and mileage to you lender. This is to allow them to value the car against industry norms to make sure that the value makes sense in relation to the loan.
In many cases the money may be directly transferred from the online car finance lender to the dealer and the vehicle will be yours.
