UK Car Loans
According to Sainsbury’s Bank’s projection, at least 931,600 individuals will apply for car loans to purchased used cars in the next 6 months in the UK alone. Car loans fall under both secured and unsecured personal loans. The unsecured category is more popular. Secured loans are often seen as a last resort for obtaining a UK car loan.
For unsecured personal loans, individuals borrow money without providing collateral for the loan. Banks, building societies and various other lending companies offer unsecured loans for cars. A loan broker with contacts for different lenders who have unsecured loan programs can also be approached.
Most people in the UK have already obtained loans using their home as collateral. Some individuals don’t have property they can use to avail a car loan. However, you don’t need to pledge any property or valuables while availing an unsecured loan. This is a huge advantage. Since the lender doesn’t have to work out the value of your what you are using as collateral, the loan transaction is also quicker. Eliminating just this one stage can make the entire transaction faster.
However, there are some disadvantages to this type of loan. The available amount of the loan is less, and most UK car loans place limitations on what you spend your loan on. Generally, they also carry higher rates of interest. The percentages and t & c’s of an unsecured loan fluctuate depending on your own details of your finances. If you have a poor credit rating, you may not be able to receive a lender’s advertised rate.
Even if you have bad credit, you can obtain an affordable UK car loan. However, it can be very difficult for the borrower to convince the lender and the banker. The borrower should be honest about his financial capabilities with the lender. All the following documentation should be ready:
- Financial information about your income sources
- Tax returns for the previous year, especially if you’re self employed
- Two months worth of pay stubs/slips
The bank needs to be convinced of your ability to repay the loan. Therefore, make sure you offer all possible documentation about your current financial status. It will be difficult to purchase a brand new car with adverse credit, so be sensible and look for a vehicle that’s at least 5 years old. The bank will be more likely to approve the loan if the loan amount is smaller and the cost cheaper.
You need to understand the details including: loan protection insurance, charges if the loan is repaid before the loan term expires, repayment holidays, selecting a specific due date and the method for monthly payment. Make sure to read all of the fine print on the loan document before signing.
You have to be very careful with lenders who advertise UK car loans at a very cheap rate. Study the market thoroughly and then make a decision whether a secured or unsecured loan is most suitable for you. Although the interest rate for an unsecured loan will be higher than for a secured one, the loan process will be significantly faster. You definitely need to shop around and compare the facilities offered and the interest rated charged. Your loan advisors can help you secure the best offer possible.