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Do you want to buy your dream motor? Or get that A to B car so you don’t have to traipse around in the rain? Whatever you’re looking for, there’s a good chance that you don’t have several thousand pounds saved up to let you pay for it in cash.
That’s where car financing comes in. Paying for your motor can take several forms, each with their own advantages and disadvantages. Here at Quidco, we can help you find a competitive rate on an unsecured or secured loan to finance your vehicle.
There are several different methods to raise the funds to pay for your motor vehicle of choice,
With Hire Purchase, you will pay an initial deposit on your vehicle, typically around 10%, followed by a series of fixed payments, until you have paid for the car in full.
This type of financing is secured against the car, so you don’t actually own it until you have made the final payment. If you miss payments, the car financing company could theoretically repossess the vehicle. Once you have paid in full, the car is yours.
HP deals are typically arranged by the car dealership, as opposed to the lender.
A PCP agreement is similar to HP, with an initial deposit, followed by monthly payments.
These are typically lower than HP, because the agreement contains an optional final balloon payment. This lump sum, paid at the end of the term, allows you to buy the car outright, although it's worth mentioning that the car may be worth significantly less than the initial purchase price by this time. You may also be liable for any damage to the car, above and beyond normal wear and tear, if you decide not to keep it.
Again, you do not own the car outright until you have paid for it in full. The car is instead secured against the loan, making it the possession of the lender for the duration of the loan. Since many people choose not to make the final payment, they never actually own the car under this type of agreement.
With a personal loan, you do not have to pay an initial deposit, and the car is yours from day one, meaning you can make modifications, and have variations in your annual mileage without having to notify the lender. You make fixed payments to the lender until your loan is paid off.
Personal loans can be secured or unsecured against your property depending upon the product that you choose. They can also take the form of ‘guarantor’ loans, if you have poor credit history and need someone to vouch for you.
The option that suits you best will depend on your personal circumstances, needs and preference. If you would like to own your vehicle outright from the beginning, a personal loan is a great option.
On the other hand, if you have some money saved for a deposit, and do not mind the restrictions of having to report your mileage, modifications, etc., to your lender, then HP or PCP are potentially good options. The latter option could be worth exploring if you want a higher value vehicle, but with low monthly payments.
You may be unsure about taking out a personal loan if you have bad credit history, or are a young person who has not developed a track record or borrowing and repayment.
HP and PCP are likely to be out of the question if you fall into either of these categories, as they typically rely on good credit.
A secured loan is one that is offered, with your property offered as collateral. This means your property is at risk if you do not keep up repayments. On the plus side, you are likely to be offered favourable interest rates, and it could help you build up your credit score, if you make regular repayments.
Our panel of lenders does include ones that offer guarantor loans. These are loans with a guarantor of your choice offering to ensure repayment of the loan in the final instance. This means they agree to repay it if you fail to do so.
This would obviously require a supportive family member or close friend, but it is an option if you need transport and can find someone to support your loan application.
If you search for a loan with Quidco, you may still find a lender willing to offer you an unsecured loan, even if you have bad credit. However, the interest may be higher than it otherwise would be. Check the repayment terms and rates carefully to see if they suit you.
In order to apply for a personal loan, you’ll need:
● To be over 18
● A UK Resident
● Be able to provide proof of income if required
Some lenders will require a UK bank account. A good credit history will also help your chances of being accepted for a loan.
To get a quote from us, you’ll need to provide your name, address, details of your employment / income and expenditure, the amount you would like to borrow and the term of the loan.
There are various factors that will affect the cost of your loan. How much you end up paying will depend upon:
● Term: The longer you choose for repayment, the more interest you will incur.
● Credit rating: The better your rating, the lower the interest rate.
● Amount borrowed: The more you borrow, the more interest you will be charged.
● Interest rate and any charges: These will be added to the loan, and must be repaid.
● What you elect / choose to pay: You can vary the length and amount depending on your needs.
As always, you weigh up the pros and cons, budget and think carefully to ensure you can reasonably afford to repay any money that is borrowed.
It depends upon the lender. Some lenders allow overpayments and early settlement, while others apply a charge for early repayment. It’s best to check the term and conditions of any loan that you take out before signing up.
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