Home Finance Car Loans - Find One That is Cheap

Car Loans – Find One That is Cheap

If you are seeking a car loan, you will definitely need to do research before plopping down good money against a possible scam or even a downright cheat. Interest rates may be incredibly high when you work out all the details, or you may even be lulled into a personal contract purchase in an effort to attain cheap car loans when in essence the cost, which seemingly appears to be rather low is actually hiding a lump sum that will hit you squarely between the eyes when the remainder comes up. Such a personal contract purchase is a direct alternative to a hire purchase.

What you will be told is that there is a means to combine all the benefits of a normal car leasing arrangement but that you’ll also be given the option of owning the vehicle outright and that it is the epitome of cheap car loans. That sentence contains a large element of truth in it, but what they often do not mention is that part of that agreement is that there will be a very unwieldy balloon payment due to take ownership of the auto. Granted you also may choose to walk away from the automobile.

The way that the monthly payments are structured is of interest too. You see, the monthly payments on such cheap car loans are founded on the difference between the retail vending value of the automobile against the residual value taking into consideration the devaluation of it due to depreciation. Hence the payments will be inherently lower on an auto that retains its value as opposed to one that suffers a huge amount of depreciation. The residual value of the automobile will also depend on the amount of mileage that you put on the auto, thus the company will also impose a mileage limit which if exceeded will result in penalties. One saving grace is that you are covered and protected by the Consumer Credit Act.

Some of the advantages of these cheap car loans that they will hold out to you are that you will have a fixed amount to pay each month, thus working within your financing budget. Also, they appear to be cheap car loans due a very small deposit that will have to be made, and you may defer some payments since you agree to a large balloon at the end. Another way to induce you to go with the personal contract purchase is to include maintenance packages. Of course the maintenance package has been figured into the overall price of the auto, but you are not supposed to realize that fact. Remember too that because you do not have ownership of the auto until that balloon payment is made, you’ll have to purchase expensive comprehensive car insurance which may not make cheap car loans as cheap as you wanted them to be.

As long as you realize the consequences of a personal contract purchase that particular deal may be well suited for you if you desire to drive an auto that may otherwise be unaffordable. This kind of financing will allow you to keep your options open, as well as give you the right to buy at the end.


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