Personal Car Loans

One of the main reasons why people might apply for a personal loan is to buy a car - these are generally called personal car loans. Sainsbury's Bank recently disclosed that in 2005, approximately £9.92 billion is expected to be borrowed to pay for cars. This is around 25.5% of the total borrowing. That's an great deal of cars, and probably a lot more than you might have guessed!

Why take out personal car loans?

One of the reasons for so many personal car loans is obviously that for most people, they simply don't have the funds or budget to pay in full up-front for a car. Even if they did, most people would not want to make a large dent in their savings just in case they need the money for emergencies later. So the options become renting a car, by buying with hire purchase, or buying a car with a loan.

Where are you buying your car from?

• If you're buying from a dealer, some car dealerships offer loans - in fact almost all of them do. The trouble with this is that you don't know what sort of a deal you're getting unless you compare several dealerships and their loan rates and conditions. Plus, you then have to buy one of their cars - and this restricts your choice, or the price you can get the car at. Either way, your negotiating power is lost, and buying from a dealer with your own loan already arranged gives you the ability to negotiate on price as you are effectively a cash buyer.
• If buying a car from an advertisement, family member or friend, they won't be able to offer you finance on the car! So you'll need a loan in this instance.

What types of loan can I use for a car?

You can usually buy a car with either a personal loan or with a car loan (these may be called personal car loans). A personal loan is just that - it's personal and if you say it's for a car it still doesn't make it a car loan. A car loan, or personal car loan, is usually a secured loan, secured against the car you purchase. Therefore you probably will pay a lower interest rate than with a personal loan, but won't be able to borrow more than the car is worth.

Contact Explore Finance to discuss personal car loans, or apply online here. We are one of the UK's largest independent loans brokerages so can search the market for a car loan for you, and get you a loan in principal agreed as soon as possible, to get you on the road with a minimum of fuss.