Tag Archives: borrower

Car Loans- Wheel your money

February 26, 2019   Home Mortgage

Today when owing a car has turned into a necessity from luxury, one can’t wait for years to save money and then buy a car. Car loans help people getting a car of their choice and need. With the car loan market in UK getting bigger by the day, the borrower can get a car loan at attractive rates. There are lucrative deals on new car loans and used car loans in the UK market.

Car loans can be secured, as well as unsecured, the latter being more popular. Let’s have a look at both the options: Unsecured car loans- The borrower needs to have an excellent credit profile for procuring an unsecured car loan since it requires no collateral to support. Different banks and lenders have varied interest rates for this loan type. Unsecured car loans do not risk your assets, so is preferred by the borrowers.

People who already have a mortgage running on their home, car or property go in unsecured car loans. Elimination of valuation of asset and legal issues concerning it quicken the process. The APR on unsecured car loans is usually higher than their secured counterpart. Though the loan amount depends on the brand of car you have chosen, it also depends upon the credit history of the borrower. The current APR that lenders in UK market are offering is ranged in between 6.4% to 14.9% (fixed).

The following are the agreements that come under unsecured car loans:

  • Hire purchase (HP) car loans- Under this agreement, the lender doesn’t get the ownership rights of the car unless the total loan is paid off.
  • Personal contract purchase (PCP)- As per this agreement, a proportion of the repayment amount is deferred to the end of the agreement so as to reduce the monthly payments.

    Secured Car loans- They demand an asset to be placed as collateral for availing the loan. Being backed up a security in the form of house, they carry a comparatively low rate of interest. Since they involve a great risk in the form of house getting seized by the lender, this loan type is not that popular.

    Car loans are basically the best way to get a car since borrowers may not have liquid cash to spend. But it requires a detailed comparative research of various deals on car loans available in the UK loan market.
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    The focusing factors to get auto loan at low rate

    February 19, 2019   Home Mortgage

    Everyone looks for auto loan at low interest rate, but most of them do not know how to avail it. They are not exactly aware of the factors that influence the interest rate of this type of loan. Entering the market offhand, they end up taking loan deals that does not suit their individual requirements. The following are the key factors that decide the cost of a loan. A prospective borrower is better off focusing on all these factors in order to crack a good deal on auto loans.

    • Attachment of collateral

    • The credit score

    • Debt to income ratio

    • Type of lender

    Attachment of collateral makes the lender feel secure in regard to repayment of the loan. So, a lender always prefers to do business with that person who places a property to secure the loan. It is because of this, lenders offer the loan at low interest rate. This, however, does not mean that a person who cannot pledge security will have no chance to avail low rate auto loans. The rest of the factors discussed here are helpful for them to avail this loan at competitive interest rate, even though they do not place collateral.

    The second important point is the credit score. Good credit score always shows the trustworthiness of the borrower. It gives the lender a sense of security that he will not lose his money, as the borrower has the reputation of paying off his debts. So, he may not fuss over the collateral issue and offer the auto loan at cheap rate.

    Thirdly, the debt to income ratio of a borrower also plays an important role in deciding the interest rate. If the income is much higher than the debt obligation, the chances are that interest rates will be comparatively low. Next, the type of lender one approaches also matters in case of the cost of a loan.

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