Getting a Car Loan
If you are considering purchasing an Eco Green Car and wish to finance your purchase with either a secured or unsecured loan then you need to consider affordability.
How long with the Car last?
Firstly if you are purchasing a second hand model ask yourself how long do you expect the vehicle to last. Realistically you wouldn’t want to still be paying for a Car Loan if the car breaks down and needs replacing before your final finance payment.
Is there a Warrantee?
Is there a warrantee with the Car that you are buying? Toyota and Chevrolet are now offering 5 a year warrantee. Vauxhall are offering an unlimited warrantee, (however this is capped at 100,000) miles and Kia Motors are offering a very sensible 7-year warrantee.
Length of Car Loan
When buying a Car the most common method of funding the purchase is through a 3 or 5-year loan. What the market is starting to witness in the current climate that with longer warrantees come longer loan repayment options. Customers are happier to spread the cost of buying their car over 5 years if they know that they are fully covered with the manufacturers parts and labour warrantee. It’s really common sense, but there is definitely a shift towards people buying cars with longer warrantees with longer payment periods attached.
City Cars with 0% Deals
There are some excellent bargains out there when looking at a Green Eco Car. Little city cars can be bought from around £5,000 with some Car Dealers offering 0% APR over 5 years with a 5 year guarantee to boot. Buyers are discovering that it is “cheaper” to trade in their old gas-guzzler and buy a small city car that does up to 62.8MPG. The loan repayments are small and the fuel economy more than makes up for the additional loan repayment costs.
APR Deals on Car Loans
I’ve broken down the costs of Car Loans to give you an idea of how much the monthly repayment may be on a Car Loan.
Firstly I will look at 0% deals. This is when you pay for your vehicle by finance but are charged no additional interest on top of that loan. Car manufacturers are usually selling the car at a higher price to accommodate the 0% APR, however it is still a good deal. If you were purchasing a car for between £5,000 and £7,500 over a 3 to 5 year loan you would realistically expect to pay between £83 and £208 per month.
5% APR Car Loans
Car manufacturers like to offer 5% APR because it is a lower than your average unsecured loan yet the Car Dealers still get extra cash for borrowing the money. If you were purchasing a car for between £5,000 and £7,5000 over a 3 to 5 year period you will pay between £94.36 and £224.78. For a car between £10,000 and £15,000 you will pay between £188.71 and £283.07 per month.
Is a Personal Loan a Better Option?
Car manufacturers that are offering loans at a higher APR than 5% are in stiff competition with unsecured personal loans. An unsecured personal loan could be used for any purpose. You could really shop around and get the best deal if the Car Dealer will not give you a good Car Finance Deal.