After a record 12 months for new car registrations last year, sales of petrol-fuelled vehicles continued to show a 4.2% year on year increase in October 2016, the Society of Motor Manufacturers and Traders (SMMT) is quoted as saying by the online journal Motor Finance.
Low inflation and the availability of attractive finance deals help to explain the continued growth in the market, says the SMMT.
Car finance
If you want to participate in that growing market of new cars, you are likely to need the help of some form of car finance – and a car loan might be one of the first sources of funds to which you turn.
The number of unsecured personal loans to households increased during the third quarter of 2016, according to a survey conducted by the Bank of England, and the percentage of applications being approved by lenders also increased.
Where to look
Individuals looking for car loans typically start their search at their high street bank by browsing the deals on offer. It generally involves a decision about how much needs to be borrowed and the period over which the loan needs to be repaid. The cost of the loan is then determined by the amount borrowed, the repayment period and the rate of interest offered by the bank.
One of the attractions of personal loans is that – provided you meet the bank’s lending criteria – you may borrow enough to cover the full purchase price of the car you want, without having to find the funds to put down by way of a deposit.
Unsecured car loans are also quite straight forward to arrange – although a secured loan is going to be more involved. In the latter case, the bank takes security against the loan being advanced and this typically takes the form of a charge on the home you own. That means drawing up the necessary documents by way of the legal contract creating that charge.
Secured loans are typically sought for borrowing relatively large sums, so are not generally involved in providing finance for the purchase of a car.
Getting the best deal
It is not only your own bank that may be prepared to advance a personal loan, but building societies and other financial institutions too. Each one is likely to offer different terms and conditions attached to the loan – most critically the rate of interest that is going to be charged (which determines just how much the loan is going to cost you).
In this highly competitive market, you might want to draw on the expertise and experience of an independent finance broker to help you track down the most cost-effective deal for you.
An independent broker is tied to no one loan provider, but is able to scour the market, looking for those opportunities where your particular application for a loan is likely to be approved and those loans offered at the most competitive rates.
Through the services of such a broker, you may also find that the loan is arranged very quickly – often the same day – and the finds transferred into your bank account with no further delay.