Car finance and car loans UK
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UK Finances and Loans » Car Loans for UK motorists
Car Loans for UK motorists
If you are looking for a car loan you should look at our normal loans and finance options. You can also look at our choice of car finance companies. These car finance companies provide you loans secured on the car you buy. For this reason they can give you bigger loans than you could get as unsecured loans. The downside with these finance companies is that if you do not keep up your loan repayments, they can re-posess your car.
Car loans generally, can be categorized into two types: secured and unsecured.
Unsecured car loan is called so, as it is offered by the lender, without any personal security from the borrower. These loans are difficult to get, come with a much higher interest rate and the loan amount offered is much smaller. If the finance companies do offer a higher loan amount then the interest rate also goes up proportionately. Unsecured loans offered, usually range from £500 to £25,000. It is important to keep in mind that the cost of a loan goes up considerably if the loan pay-back time (in financial jargon referred to as loan 'term') is more, as the lenders charge the interest until the loan is repaid. Experts suggest a maximum term of five years. It is best for the borrower to reduce the term as much as possible so that he can keep the loan costs low.
The pre-conditions for obtaining an unsecured loan are more stringent. The lending companies require the borrower to be over 18 years of age. He should have a regular (full-time) income source. The borrower might also be required to produce an income statement as a proof that his income is sufficient to make the loan repayment. The lending company will also assess the borrower's credit score.
The lender can initiate litigation if the borrower is unable to repay the loan.
Secured car loan: For obtaining a secured car loan, the borrower is required to pledge his asset as an item of security. The pledged item is sometimes referred to as collateral security. The car itself as the pledged item of security is sufficient to obtain a secured loan. However, some lenders might ask for a high valued security like a house.
Secured loans are offered at a lower interest rate and are much easier to obtain. Lenders usually offer a higher secured loan amount, as they have a guarantee of the loan amount being repaid - the guarantee is the borrower's pledged item. In most cases, the borrower can choose the period for repaying the loan, typically up to a maximum of fifteen years. It is nonetheless preferable to repay the loan within a reasonable term. The cost of loan is proportional to the period of loan, as interest is chargeable each year. As the borrower can get a bigger loan amount, he is at an advantage and he can choose a car to suit his needs. The borrower can get a loan amounting up to £25,000.
It is in the best interest of the borrower and the lender that the secured loan is repaid in adherence to the agreed terms. If the borrower is unable to make timely repayment of the loan, the lender as a last option, might lay legal claim to the borrower's asset that he is holding. This is not likely to happen immediately after you fall behind the repayment schedule. It is best to inform the lender immediately, the reason for faltering.
UK Finances and Loans does not represent any particular loans or finance company. When requesting a loan from any of the online loans or finance companies listed you are dealing directly with the loans or finance company. We are not responsible for the transaction or any problems with applications or loans arranged through any of the online loans or finance companies listed on this site.
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