Loans aren't always the best way to borrow money
With cars loans aren't always the best way to pay for your wheels: because cars depreciate so heavily, you could end up with a car that's worth next to nothing at the end of your loan period. Get the smallest, shortest loan possible and consider alternative options.
For people who want to buy cars loans aren't the only way to pay – and a bad loan could be a financial mistake. Thanks to depreciation, a £10,000 car will be worth a fraction of that amount after three years, and the more expensive the car the bigger the price drop. The longer the loan (and the higher the interest rate), the bigger the difference between what you've paid for your car and the value of your vehicle at the end of the loan period.
When it comes to cars loans are just one option. Many dealers offer 0% finance, which can save you several hundred pounds over the life of your loan; you could lease a car, which means you pay a monthly "rental" but never own the car; or you could try a personal contract plan, which is available from many manufacturers. Instead of paying the full cost, you borrow a percentage of the vehicle's value; at the end of the loan period you can either pay the balance, start again with a brand new car or walk away.
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