Adverse Credit Loans

To fund the purchase of the car you want rather than the car you can afford you may need to opt for a car loan. In today’s market, there are numerous ways to fund the purchase of a car that it can sometimes become bewildering for consumers. Here we attempt to guide you through the different types of loans available to you, as the automotive buyer, on the market, and provide you with advice on how to get yourself the deals of superlative quality and where to look for the best and cheapest car insurance in reference to your individual circumstances and credit history.

There are three major types of car loan:

1. Hire purchase (HP)

This sort of car loan is arranged directly with the car dealership you purchase the car from, and to all intents and purposes means that you are hiring the car from the dealer until you have paid the final instalment of the loan, when rights of the vehicle are transferred completely over to you.

2. Manufacturers' schemes

With these types of loans they are created and advertised by the car company and can be arranged directly with them or through one of your local car dealerships. Part exchanges on your old vehicle (all be it a clapped out old rust bucket), are usually accepted, and the outstanding balance is then paid of through a loan. You will not actually be the proprietor of the vehicle until you have paid off the loan in full, and the car will be repossessed if you do not keep up on repayments.

These schemes are usually offered at higher interest rates than the ones that you would find with standard lenders, but the manufacturer will sometimes offer special deals, sometimes interest-free credit on selected models. If the car you are looking to buy is available through a 0% or low interest rate manufacturer scheme, this could indeed be a very good choice.

3. Personal loans

With a personal loan you have the option to either take out an all-purpose personal loan, or a personal loan tailored specifically for the purpose of car purchase. The two are in fact very similar, but due to a car loan being taken out specifically to buy a car, it is possible that the lender will suggest to you a car-related incentive on the loan, such as free car insurance, roadside assistance cover or special discounts on car accessories at associate garages and stores.

A car loan is typically classed as a secured loan, as opposed to an unsecured loan, even though you do not essentially need to be a homeowner to get your hands on one. This is because the loan is secured against the car itself and not on your property. Personal loans do have a tendency to have lower interest rates than car company schemes or hire purchase loans, but special low interest rate deals are far less common.