Finding the Right Car Finance Company

Wednesday, December 17, 2014, 6:00 AM | Leave Comment

Most people that buy a brand new motor car are unable to pay for it in cash so they end up borrowing the money that they need. If you are considering purchasing a new vehicle, consider the following factors before you decide which banks or credit companies you are going to approach.

  • The total cost

    It can be tempting to focus on the monthly repayments rather than the total cost of borrowing when taking out a car loan but this would be a mistake.

    If you want to make sure that the credit provider you select is truly offering you a good deal, take a close look at all the charges involved.

    Every company sets its own interest rates and most of them have various penalty charges that they levy in the event that creditors are late making repayments. You should take all of these into account when doing your sums.

  • Flexibility

    Even if you are sure that you will not encounter any problems when repaying your loan, it is a good idea to make sure that you choose an understanding credit company just in case unforeseen circumstances should make it difficult for you to meet your financial commitments at some point in the next few years.

    Find out what procedures the finance firms you are considering follow when dealing with late payers and make sure that you know exactly what your options will be should you suddenly find yourself out of work before the loan has been repaid in full.

    The amount you need to borrow – you should know exactly how much cash you need to raise before you start to evaluate your financing options.

    You can find out how much your current vehicle is likely to fetch by using an online second hand car evaluation service or by asking local dealers what they will give you for it.

    Once you know how much you can get for your old car, you will of course have a much better idea of what you need to borrow.

  • Your credit history

    if you have borrowed money in the past and managed to repay it in full without any issues, it will probably be quite an easy task for you to find willing lenders to help you this time.

    On the other hand, if you have run into financial difficulties and made late repayments in the past, or perhaps even defaulted on a credit agreement and had legal action taken against you, it may be hard for you to borrow money now.

    It is a good idea to request a copy of your file from the major credit reference agencies before you start to approach lenders, to see what information they are holding.

Whether financial institutions are falling over themselves to lend you the money you need or it takes some time before you find a company that is willing to help, always study the terms and conditions of any loan agreement you are considering before you sign on the dotted line.

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