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There is no doubt that when shopping for a car, most people go to a variety of dealers and spend some real time and effort in pricing and some will haggle with a dealer over the most miniscule of selling points, such as a tank of petrol. Then, once they are satisfied with the deal, they simply sign the first loan agreement that is put in front of them, even though the terms of the loan can have far-reaching consequences costing hundreds or thousands of pounds.
The first thing to watch for in an auto loan is who is providing the loan. It is estimated that up to 80 percent of used cars are bought through hire purchase. HP is arranged through the dealer and is the highest-costing source of financing. To get the best deal, an auto loan should be secured through a bank or other reputable lender. Even then, it pays to shop around as much as one would for the actual car. Sometimes the dealer will offer a better price on the car if the buyer agrees to pay with HP through them. This is a big red flag and usually a sign to try out another dealer. Car prices should always be negotiated separately from the loan and not as a package.
Before going to the dealer, it is often a good idea to use an online comparison tool. Several lenders will provide fast results that meet a buyer’s personal credit score as the interest rate will be lower when the buyer has better credit. A comparison tool will provide knowledge that can be useful when agreeing on the exact terms of the loans. Interest rates will also vary by lender for no apparent reason whatsoever.
When comparing lenders and loan terms, always note the deposit or down-payment required and the length of the loan. If a person can afford to a pay a little more on a monthly basis, it can save a lot of money in interest over the life of the loan. There are also hidden costs that must be watched for. Read about any discounts or loss of discounts before signing. See if the interest rate is fixed. With a variable rate, the lender may up the interest during the repayment period. See if there are any administration fees or fees for paying extra on the principle to end the loan sooner. Following all of these tips can save a consumer a great deal of money.