Finding the best car loan

by Admin | October 30th, 2007

Consider how you will pay for your new vehicle before buying will save you some money. The end result will still be you driving a new car but the same cannot be said about finance options.

Depending on where your finance comes from, you might pay off the loan in a few months or save some money on interest. The pros of borrowing from a bank and building society include competitive rates and possibly a personalised service. Also, you will be able to borrow all the money from a single creditor rather than trying to raise the funds in a piecemeal fashion.

At face value, financing a car through a dealer can seem like a great idea as this I likely to be the quickest and easiest method of taking out finance and on occasion, you may even find the unscrupulous dealer filling out the forms for you without asking how you intend to pay.

We compared a number of examples from well known high street banks and found that Alliance & Leicester currently offers the most competitive car loans at 6.9% APR Typical for personal loans between £7,500 and £20,000 (as of 20/09.2007). Applying Online is also simple and takes 10 minutes and you could have a decision within the hour so can be as quick as using the dealership. However, unlike the car dealership loan, such personal loans are usually a simple interest loan with no hidden charges.

Car Loans Compared*

New customers taking £7,500 over 60 months

	APR Typical	Monthly Cost	Total Payable	Savings
Alliance & Leicester	6.9%	£147.55	£8,853.00	-
Lloyds TSB	7.4%	£149.23	£8,953.80	£100.80
Abbey	7.9%	£150.74	£9,044.40	£191.40
Egg	9.9%	£157.57	£9,454.20	£601.20
Black Horse	11.9%	£164.57	£9,874.20	£1,021.20

Source of competitor data: Moneyfacts.co.uk - the money search engine 23.07.07
Things do change quite quickly in the world of loans though so make sure you use a comparison engine such that that on MoneySupermarket.com or www.fool.co.uk in order to compare loans for the best current rates at the time. You will be amazed as the determination of the banks to come up with better and better deals!

If you are able to finance a new car by borrowing from a family member or friend, this is worth considering. So long as you stay true to your word with regards to repayments, this should work out to be a good arrangement with extremely competitive interest rates or interest free, not to mention easy, quick and very flexible terms at times and a far more personalised service that any bank could provide.