Categories
Car Loans

Are Car loans Worth Getting?

Many people will choose to take out a car loan if they need a new car. It is worth considering whether this type of loan is worth getting though. This is because you will find that the car loan is expensive and this will add on cost to the car which you may not really want to pay. So, think hard about whether the car loan is right for you or whether there are alternatives.

Do I need a new car?

The first question to ask yourself is whether you really need the new car. It might be that your current car no longer works or is costing too much to keep repairing and it is vital for you to have a car for work or for visiting family. In this case it is pretty obvious that you will need a car. However, for some people a car may not be essential and they might be able to consider going without one. There may also be people that will be able to wait a while before replacing the car. Perhaps you are just considering changing it because your friends are getting new cars or because you fancy a change. It might be worth waiting if this is the case, but work out how much it will cost and how much the loan will cost and then you will be able to decide whether you really feel that it will be worth it.

Do I need to borrow?

If you have savings that are enough to buy a car or that you can put towards it, then it is worth considering using them. This is because the interest that you get on savings will be low and you will pay a lot more in interest on the loan. Therefore, financially it will make sense. However, often people are not happy about parting with their savings. This can be because they are saving up for a specific thing and do not want to use the money on anything else or because they want the money there to fall back on. It can be wise to calculate how much you will save if you do use your savings though as this might be a big influence on your decision.

If you can wait a while for the car, then it could be wise to save up for it instead of borrowing. If you set up a direct debit to pay money into a savings account each month to the same value as the loan that you were considering then you should be able to save up for the car that you want. It will take some time, but it will save you money in the long term as you will not have to buy a loan.

Will a car loan be best?

It is good to compare the different car loans available to see which looks like it might be the best for you. You might be tempted to just go for the one that is offered by the place that you are buying the car. Although this is worth looking at, it is also good to think about whether there are any other places that you can look for car loans and compare those as well. You could find that you will be able to find something that offers better value for money which is not specifically a car loan. Compare everything to ensure that you are getting the best loan for you.

Will alternative loans be better?

It is also worth looking at different types of loans. Although there are loans specifically for buying cars, there are also general loans which might enable you to borrow the amount of money that you need without you having to pay so much in loan costs. It can be worth making sure that you look at all of your options. Some people might choose to extend their mortgage, use a personal loan or something like this rather than using a car loan. Do make sure that you are careful in your calculations though and ensure that you are picking a loan that suits you. Not only do you need to compare the cost and see which loan will be cheapest but you need to consider the repayments. Make sure that it has a repayment schedule that you can afford. You will find that if you repay over a longer time period you will make smaller repayments. This will be easier to manage but it will make the loan more expensive as you will be borrowing the money for longer. Have a think about how much you think that you will be able to afford and then you will be able to choose a repayment schedule that will suit you really well and hopefully therefore a loan that will work well for you.

Categories
Personal Loans

How to find the best Personal Loans

There are lots of different types of personal loan and it can be really confusing knowing which type might be the best for you to use. You might want to understand a bit more about them so that you can decide which will be the bets for you. They will vary in a variety of ways.

Interest

The thing most people look at when they are thinking about any sort of loan is the interest rate. It can be easy to compare different loans based on how much interest you are being charged for them. This seems to be a good way to decide which is best. It is wise though to be very careful of this as interest rates do not always tell the full story. An APR means an annual percentage rate and this is the yearly interest but the lender may have additional charges as well. If it is the AER then this will include costs as well, so it will be a percentage that you can accurately compare between lenders.


Cost

This means that it might be better to compare the lenders on the full cost of the loan rather than the interest rate. You may find that you can use a calculator online to work out how much you will repay. If you know how much the repayments will be and how many you will make then you can add them up and take away the sum you borrowed to work out the cost. If you cannot find the figures, a calculator or doing these calculations feels tricky, then you can contact the lenders and they will be able to let you know. They will be able to work it out for you and you will be able to use these figures to compare the costs of the different loans. This should enable you to see which will be the cheapest for you. However, before you decide to go with the cheapest, it is worth making sure that you are getting good value for money. This is because there are other things that you should consider as well as the cost, when you are looking at which loan to take out.

Repayments

It is also wise to compare the lenders based on the repayments that you will have to make. You will find that this will vary as well. It is a really good idea to take a look at how much you will be expected to repay to see what you can afford. You are likely to find that if the repayments are smaller, the loan will be more expensive because it will last longer. However, you might be prepared to pay this extra money if it means that you will be able to manage the repayments more easily. It can be a good idea to calculate how much you can afford to repay and then choose a loan which has a repayment schedule that suits you. You will need to look back at previous bank balances and this will enable you to see how much money you would normally have available and this will allow you to decide what you can afford. It can be really stressful if you struggle to make loan repayments or if you have to sacrifice other essentials as a result of making them. Therefore, this step is one of the most important as it will make a huge difference to your finances during the term of the loan.

Lender

You may also have preferences with regards to the lender that you want to choose. Some people like to go with lenders they have used before or ones that come recommended by others. Some are only interested in using ones that they have heard of. You might want to make sure that you have a lender that can provide good customer service, that has a local branch you can go in if you get problems or that you can deal with online. It is good to think about whether you have any considerations with regards to this that might influence your choice. It can seem that there will be a lot to think about and you might think that this will take a lot of time. However, you will find that it will not take that long and it will be really worthwhile. It will enable you to know that when you do pick a loan, that you have chosen wisely. You will know that you have picked the lender that will be best for you and that you know you will be able to feel confident that the loan you picked will be the best for your needs. This will give you a positive start to your lending experience and will hopefully mean that you will have a good all-round experience.