Is finding a car loan driving you mad?
by JAY TILLOTSON
It's coming to the time for the new '58' number plates to be brought out in the UK. Motorists everywhere will be clamouring for the latest models, and forecourts will be swamped.
Or will they? Can anyone really afford a new car these days? Petrol prices are rising, car tax is going up, and driving and maintaining a car is now more expensive than ever. With calls to introduce a new tax based on the type of roads you use the most, being a driver could soon equal being bankrupt!
But the price of the actual cars haven't increased as much as you'd expect. The average price of a brand new car now is between ?7k and ?12k, not much more than it was 5 years ago. Newer cars tend to be more economical, and are also given a pollutant rating. This is necessary to determine how much tax is paid on cars registered after Mar 01, and means that the 'greenest' cars could pay little or no road tax at all.
Add to this the benefit of a possible year or two of free insurance, and buying a car from the dealership is actually quite an attractive option; provided you can get the finance. Most dealerships will offer you their own forecourt finance option but this isn't mandatory; there's nothing stopping you applying for a loan at a regular lender for the price of the car. You may be able to get a better deal this way. Car salesmen are notorious for having the gift of the gab and you may end up being sweet-talked into a host of things you don't need but will cost you more; 'free' breakdown cover, payment protection, and many other little extras that can add up to a hefty sum. If you walk into a dealership ready to pay a set amount of cash it's easier to negotiate a discount; car prices are never set in stone and a good bargainer will be able to haggle.
Once you have your car you need to make sure you keep up with the repayments; if you bought it using a personal loan your credit file will be affected if you don't, but if you bought it through forecourt finance the dealership can also take your car away. As with any other credit, don't take out the loan unless you're sure you can afford it.
The credit crunch means that personal loans are proving more difficult to get, and this can also affect car finance loans. Unsecured loans such as these can put your credit file at risk if you don't keep up with repayments.
