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What is car credit finance

Car credit finance allows an individual or business to borrow the capital they need to secure the vehicle they wish to buy. There are many different types of car credit finance ranging from hire purchase agreements to personal loans.

Personal loans for car credit finance are just like any other personal loan you would take out with your bank. According to popular high street bank Santander the average personal loan in the UK is £7,000. For a loan of this amount Santander offer a competitive 8.4% APR, making your repayments over a five-year period around £142.

Hire purchase agreements are the type of car credit finance taken out with specialist finance firms. The agreement means the company lends you the money to purchase the vehicle you want, usually paying the dealer direct. The downside to a hire purchase agreement is you do not actually own the car outright until your last loan repayment has been made. This means if you default on your hire purchase agreement, the company will take your car as settlement of the loan. You could also still end up owing them money, if they are unable to sell the car for the amount you are outstanding on your car credit finance agreement. Hire purchase agreements usually require deposits, which can be anywhere up to 25% of the amount borrowed.

Before committing to any type of finance, it is always best to compare lenders. This will help ensure you get the best deal with the lowest interest. Money Supermarket and Go Compare are two comparison sites that will look through all the top car credit finance lenders, including banks and loan firms, to get you the best offer based on the details you provide.

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