ARRANGE CAR LOAN BEFORE PURCHASE FULL
ARRANGE CAR LOAN BEFORE PURCHASE FREE

Think carefully before buying payment protection insurance (PPI) or other insurance, such as GAP cover, which can be expensive and might give limited cover.

You should also check if the interest rate is fixed or variable, so you’re aware of when payments might go up. Remember a bigger deposit will usually mean a lower interest rate.

Compare interest rates by looking at the APR (annual percentage rate), which includes all the charges you have to pay.

Beware of early repayment or other charges, such as charges for exceeding the forecast mileage in personal contract purchase plans and personal leasing.

ARRANGE CAR LOAN BEFORE PURCHASE FULL

Compare the total cost of borrowing, including all charges over the full term of the loan.To understand your options for getting out of your car finance arrangement early, see our guide Cutting car finance costs. Ask the firm offering you finance what happens if you struggle to pay one month, and what options would you have if you couldn’t afford to pay.

In addition to verifying the history of the car you want to buy, you should also arrange a prepurchase used car inspection.

ARRANGE CAR LOAN BEFORE PURCHASE FREE

Your finance provide will be happy to answer any questions you have about it. Manufacturers will do recall repairs free of charge, but it’s an important detail to know before purchasing a car. If you don’t understand it, it might not be the right finance solution for you.

Make sure you understand the terms of agreement such as mile limits, balloon payments and paying for maintenance.

Also think about how you’ll pay for running costs, such as insurance, road tax and maintenance.

Make sure you can afford the monthly payment, not just now but for the whole term of the loan.

When you compare car finance deals, there are a few important things to do before making a final choice. The car will need to be in good condition too, or you might be charged for repair costs. If you haven’t, you’ll need to pay the difference before you can get out of the contract. To end the deal early or cancel it, you must have paid half the value of the vehicle. If you haven’t got this money saved, you might have to take out another loan to pay it off. It will be a larger payment than your monthly payment. This is based on what the dealer thinks the car is worth now – Guaranteed Minimum Future Value (GMFV) – and can range from a few hundred to a few thousand pounds.

Use the resale value towards buying a new car.

Return the car to the dealer and pay any charges that you might have incurred (for example, through excessive wear and tear or going over the milage).

This is based on a forecast of annual mileage over the term of the agreement.

Instead of getting a loan for the full cost of the car, you get a loan for the difference between its price brand new and the predicted value of the car at the end of the hire agreement. Keep in mind though that the total amount of money you’ll pay back is often higher. This type of car finance deal is similar to a hire purchase agreement, but you usually make lower monthly payments.

Arrange car loan before purchase