Product Description
A car loan is a personal loan that enables you to purchase a vehicle. The terms tend to vary depending on whether you get the loan from the car dealer, the car manufacturer or your own bank/building society. A car manufacturer may have their own loan programs, and there can be incentives within the car deal. A car dealer however tends to check around at the banks and other lending institutions for a loan so you may find that the car dealer can find you a better interest rate because of their various sources. Your bank will typically provide you with a personal loan based on your banking history with them.

Main Players
There are several car finance companies to choose from including Welcome Car, CarLoans4U.co.uk and ACF Car Finance. It is suggested however that if you can get a personal loan from a bank or building society then this would be preferable as the interest rates are quite high from the car finance companies. At present the top personal loan lenders include the Woolwich, Abbey, Halifax and a number of the other well known building societies.

Pros of Car Loans

• You have the money to purchase a new or used car without having to save for years on end.
• As with all types of finance or credit, a car loan will help with building your credit history.

Cons of Car Loans

• You have to pay interest for the life of the loan which can technically add thousands to the price of the car.
• The loan has to be paid even if you rite the car off in an accident.
• Car insurance is higher due to the additional coverage needed.
• If you don’t keep up the payments, your car can be repossessed.

Things to Consider When Choosing a Provider
There are three major providers of car loans. The car manufacturer may offer a loan through their company. When you purchase through a manufacturer you generally get incentives, but the interest may be higher than your bank or other car loan company. You also have to purchase the vehicle that the incentive works on, rather than another car of lesser value.

A car dealer can sometimes be working for the car manufacturer. In other words some dealerships are less reputable when it comes to their car loans. They will not always provide the best interest rate, even though they should be. Their interest is getting you into the car, for the amount you can afford to pay per month. In fact some car dealers will ask you what the top amount you can afford to pay per month is. Then they come back stating they could only get a deal at that top payment rather than something a little lower.

A personal bank is sometimes the hardest provider to get your car loan through. However, they are also one of the best providers. They know your banking history, they are usually loyal to their customers, and they will most likely try to find the best deal for you. It is best to consider all three options open to you and then decide who has the best deal. Stay away from online companies promising car loans, unless they can prove their license for lending to you.

BUYability Summary
Car loans are there to help you get a newer car. There are various options available though so you should take some time to do a bit of research. Check the banks and building societies for their personal loan rates before signing for a car loan. It is worth remembering that financing a car through a car loan can lead to repossession if you fail to pay so make sure you can afford the repayments before putting your name on the dotted line.