Car Loan Interest Rates
Compare car loan interest rates
When taking out any kind of loan, getting the best interest rate possible is essential. It can make a big difference to your monthly payments and the total amount you end up repaying over the life of the loan.
Buying a car on finance may be more expensive than taking out a car loan from a bank, building society or other provider. This is due to the higher interest rates car dealerships often charge on their finance deals.
If you are planning to buy a car or wondering whether you might be able to save money by refinancing to pay off an existing dealership finance plan, there are two main types of loans to consider. Which best suits you will depend on your borrowing needs and personal circumstances.
Car loan interest rates for personal unsecured loans
For loans of between £1,000 and £25,000 a personal unsecured car loan may well offer the best interest rates. Many providers market loans specifically aimed towards financing car purchases and the application process is generally quick and relatively simple.
Unsecured loans tend to be offered over shorter periods than some other types of finance but the interest rates you get are often fixed for the lifetime of the loan. The exact rate you get will depend on your personal circumstances and credit history.
Although personal car loans are unsecured, failure to repay still has consequences. If you do not stay on top of your monthly repayments it may harm your credit rating and ability to borrow in future. Defaulting on your debt may ultimately cause your account to be referred to a county court who may appoint a bailiff to recover the outstanding balance.
Car loan interest rates on homeowner secured loans
Homeowners may be able to get better rates of interest on car loans by taking advantage of secured borrowing. This means taking out a loan with your house as collateral. This often allows you to borrow much larger amounts over longer periods and can be a good choice for loans over £25,000.
The interest rate you pay on a secured loan will depend on a number of factors, including the amount you wish to borrow and your credit history. A major influence will be the total amount you want to borrow, including any existing loans such as a mortgage, compared to the market value of the property. This is represented by a loan-to-value (LTV) ratio. The lower your LTV, the lower the interest rate you are likely to be offered.
Please bear in mind that if you fail to repay a car loan secured against your home, you may be required to sell the property in order to pay off the outstanding balance.
Get the best car loan interest rates on the market
There are a wide range of car loan providers across the industry offering different interest rates which can change regularly. This makes it hard to know which offers the best value for you.
Our free car loan calculator at the top of this page lets you quickly and easily compare the best deals from across the market. This means you can find the best finance options for your car purchase without the hassle of manually checking with dozens of lenders.