There comes a time in a car’s life when paying for repairs is simply throwing good money after bad. If you’re thinking about buying a new car on finance, you have options when it comes to finding a loan that you can afford.
Perhaps you can’t find an affordable car loan from the main dealerships, or you may be experiencing problems being accepted for loans from traditional lenders. Whatever your financial circumstances, you may be able to secure low rate loans from the UK’s peer to peer loan services. Simple application procedures, relatively low interest rates and the absence of early redemption penalties are persuading many car-owners to ditch the high street banks and manufacturer car credit schemes in favour of these new and innovative borrowing solutions.
What is a Peer to Peer Loan?
Most car loans are provided by major banks or finance institutions. They have huge overheads and financial commitments to cover, so they can be very rigid in their approach to lending, and the interest rates they charge can be very high in certain circumstances. However, peer to peer lending puts ordinary savers and consumers in touch with borrowers. And because private lenders don’t have the overheads of major financial institutions, the loans they offer are often far cheaper.
In most cases, an online service will act as a facilitator of a loan. However, the transaction will be a legal arrangement between the provider of the loan and the borrower. In most cases, several lenders are actually financing the car loan.
What Are the Advantages of a Peer to Peer Loan?
If you want to change your car every three or four years, a peer to peer loan could be a far more cost-effective option than most personal loans on the market. This is because there are rarely early redemption fees associated with peer to peer products. So, if you want to trade your car in or pay off your loan early, you usually won’t incur penalty charges for doing so.
A peer to peer loan can be quicker to secure than standard loans in certain circumstances. Traditional lenders have made borrowing more difficult for consumers since the banking crash of 2008, and that could delay the payment of your loan. If you have found a car, that delay could mean you miss out on it.
Perhaps the biggest advantage involved with peer to peer loans is how much they cost. If you have a good credit history, and you can prove your ability to keep up with the monthly repayments, you might be able to secure the loan you need for an interest rate of as little as 5 percent. This could give you extra spending power during your search for the perfect car.
A great many car dealerships rely on commissions from finance companies for a large proportion of their income. This means that they will push you in the direction of their own finance options, and dissuade you from paying in cash or with finance you have arranged yourself. However, by having your funds in place before you start shopping for a new car, you can put yourself in a strong negotiating position.
A peer to peer loan can be arranged online, and you could have it in your bank within two days of your application. This affordable way of buying a new car has the potential to save you money, and that could allow you to get your hands on the car of your dreams.