What to consider before taking out a car loan
Buying a new car, whether brand new or second hand, can be a complicated and expensive process. Car loans are designed to ease the process by making it easier for motorists to afford this pivotal purchase – but what should you consider before taking a car loan?
Your credit rating
As with most financial products, your credit rating can determine the interest rates which you are charged for car loans as well as how much money you are offered on credit. Knowing your credit rating before you apply for a loan can give you an estimate of how much you are likely to be offered and this enables you to shop with greater savvy.
Of course, how much you intend to spend on a car is also important and you should always review your financial situation thoroughly before setting your budget. Consider all regular ingoing and outgoing spends and make sure you set money aside for any unexpected costs you may encounter.
Then look at your savings and decide how much you are willing to spend on a car. Remember to adjust this accordingly if you are planning on buying a second hand car – which is a naturally cheaper option.
If looking at these cars, make sure you complete the necessary checks to make sure your car isn’t hiding any secrets – such as if they have been reported stolen or have been ‘written off’.
The type of car loan you obtain also depends on the type of car you intend to buy – so you need to give this great thought. Used car finance can be obtained for second hand purchases whilst car loans are also available for all makes and model of new car.
Safety, practicality, comfort and performance are the four main features you should consider when buying a car, so always give these great thought and make sure you spend your car loan wisely.
The most important safety features to look for in a new car are often fairly standard fittings, such as innovative brake systems, whilst other elements such as efficiency can be evaluated by looking at the pros and cons of electric vehicles and hybrid models against cars with a traditional combustion engine.
Lastly, it is important to remember that all car loans will have to be repaid at some point. Checking the repayment schedule is suitable for you and your situation is vital, so make sure you give this plenty of thought.
Investigate how you can get a car loan and ensure the repayments are manageable and fair.