#The interest charged for a car loan will vary between banks and other financial institutions for essentially the same product (loan amount, term etc.) So, if you are interested in taking out a car loan, it will probably pay you to shop around and compare deals. Don t be afraid to ask the lender for a detailed breakdown of the costs and repayment terms so that you can easily compare unsecured loan offers between different banks or building societies.
- Like any other form of borrowing, a car loan needs to be repaid. The repayment period for the loan is also quite flexible ranging from six months up to ten years typically. If your bank or building society won t give you a car loan, you might want to offer transferring your account to another financial institution if they agree to grant you the loan on favorable terms. Loyalty is a two way street!
It could be the right time to consider buying a new car because of the current global recession. Due to the lack of confidence in global financial markets, it is currently difficult for businesses (and individuals) to borrow money. Car manufacturers are asking for financial assistance to help them through their current difficulties from their governments and many have already made moves to scale back production levels. It may be more difficult at the moment for you to get a car loan through the traditional channels because financial institutions are currently very risk averse.
It is surely ironic that, in the face of a global financial crisis that largely stems from a loss of confidence about and within the financial sector, financial institutions have become much more cautious about lending money to members of the general public. Lending money is at the very heart of banking sector activities and it is only through the granting of new loans that the global recession that the world is experiencing will be brought to an end. The recession was largely triggered by the so-called sub-prime lending crisis in which major financial institutions lent money to individuals that were ultimately unable to repay their debt. At the moment, the financial sector seems to be in a once bitten, twice shy mindset. Confidence will return to the sector, but the system has had a nasty shock and it will take some time before money supply recovers. In the meantime, car manufacturers are looking for customers like you.
The current financial climate has turned the market into a buyeR s market where producers are all chasing a smaller pool of customers. Traditionally, the best way to attract a customer in hard times is to drop the cost of your product; so expect to see some fabulous deals on new and used cars in the coming months. I think you may well find dealerships offering some very attractive deals on car loans too. During the last recession, it was not unknown for some dealerships to offer car loans at zero percent APR (annual percentage rate or interest) on new cars.
So if the banks are reluctant to offer you a loan, why not talk to the dealer at your local garage? It could be the time to try that least British of activities; haggling. The dealer wants to sell you a car, but you need a car loan and a sweet deal on your new motor (John). Don t forget that you need to look at the total price of the deal: cost of the car itself and the cost of your car loan (i.e. the APR on the loan times the number of years that the car loan is being taken out for). Now could be the perfect time to shop around for the car of your dreams. In a buyeR s market, you should take your time and perhaps consider a range of cars from different manufacturers, or even different affiliates of the same manufacturer that are available within your region.
Another factor that you ll want to consider is the resale value of your old car which you need to factor into the deal as well. Of course, if you can get a zero percent APR deal and talk the garage into a good price on the new car, you may be able to get a really good bargain but remember not to spend more than you can afford and calculate your monthly expenditure.