Low Interest Car Loans
Compare low interest car loans
When you are planning on buying a new car, it’s worth spending some time considering the best way to pay for it. Buying a car on a finance plan provided by your dealership does not necessarily offer the best value for money.
In fact, it is often cheaper to take out a low interest car loan from a bank, building society of other provider and use this to fund your purchase. Taking this approach can result in lower monthly payments and a smaller total amount to pay back over the course of the loan compared to many car dealership finance plans.
There are two main types of car loans you are likely to be able to access – personal unsecured loans and secured homeowner loans. These can both offer attractive rates of interest, if you choose the right products and provider, so it is important to understand which is most appropriate for your needs and financial circumstances.
Personal unsecured low interest car loans
If you need to borrow £1,000-£25,000, a personal unsecured loan is worth thinking about. Many lenders offer unsecured loans specifically for financing car purchases and the application process is often relatively fast and straightforward.
Many providers will offer an instant decision, especially for online applications, and even those with bad credit may be able to get a car loan this way. It is often possible to get attractively low interest rates on unsecured car loans, although the exact rate you are likely to be offered will depend on your personal financial circumstances. Interest rates are often fixed for the lifetime of the loan.
It is important to bear in mind when taking out an unsecured loan that failure to make your monthly repayments may affect your credit rating. Repeated failure to pay could result in your account being referred to a county court-appointed bailiff to recover the debt.
Homeowner secured low interest car loans
If you own your own home, you may be able to get a more attractive interest rate by taking out a car loan secured against your home. Homeowner loans are often the better choice if you need to borrow in excess of £25,000.
The lower the combined total debt you wish to leverage against your house relative to its market value, the better rate you are likely to get. The exact interest rate you are offered will also depend on your personal finances and credit rating.
Consider carefully before securing debt against your property as failing to keep up with your repayments could lead to your home being repossessed.
Get the best rates on low interest car loans
With so many lenders and different car loan types to choose from, it can be difficult to know which offer the best value.
Our free loan comparison tool at the top of this page allows you to quickly see all the best offers from across the market that match your borrowing needs and personal circumstances.
This means you can be confident you are getting the best possible rates on your car loan, whatever your requirements.