A personal loan is a common way for people to buy a new car on finance. Personal loans can be taken from banks, building societies and finance companies. The duration of the loan can vary depending on what you agree with the loan company. Loans from banks for cars can be paid off over a number of years, and will have a fixed rate of interest.
There are two types of loan available, either secured or unsecured. With a secured loan, the finance company or bank will retain ownership of the car until the balance of the loan has been paid off. An unsecured loan means that the buyer is attached to the loan and not the car, meaning that the borrower owns the vehicle from the beginning. Most unsecured loans are more expensive and will have a higher interest rate than a secured loan.
Benefits of a Personal Loan
- Quick and easy to set up
- The car is legally yours and as such you have the ability to make more decisions about its use.
- You can ensure the agreement is as flexible as possible and chose how much to pay and the period of time.
- Throughout the agreement, the monthly loan repayments will have a fixed rate of interest and is a good way to help with budgeting and planning.
Things to Remember
- The car cannot be handed back in the event that you fail to keep up with any of the agreed repayments.
- Your personal credit history is taken into account when applying for a loan. As a consequence, you may not be eligible for a loan, and if you are you may not be eligible for the lowest rate of advertised interest available. Check with your lender for further information.
Alternative Finance Options
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