Buying a car can be a tricky business. While it may be exciting to buy your new car, there are many costs involved that need to be considered first. Car loans therefore exist to help ease the process while preventing you from spending all your cash in one go. For a lot of people however, there is the worry of not being able to afford their loan re-payments. Payment protection insurance (PPI) is offered by most lenders and insurers and is designed to help cover any payments that you are unable to make when paying back your loan. PPI can be sold alongside your loan but before seeking out both, it is important to consider the factors below.
It may seem pretty obvious but always check what you have in savings first. Take on board all of your ingoing and outgoing costs and then decide your budget. Don’t blow a huge amount of money on a car if you cannot afford the unexpected extras you may encounter. Some unexpected costs can be avoided when you carry out the necessary checks on potential cars. You want to make sure that you evade cars that have been ‘written off’ for instance.
Your credit history will determine your interest rate so it is advisable that you fix any mistakes on your reports at least six months before you purchase a car. Your interest rate will be lower if your credit score is higher so it is a good idea to be in the best place possible financially. If your credit history is poor however and you have been refused a loan from your bank, it is possible to consult websites that deal specifically with arranging car loans. You will usually be able to find a bespoke service with loan options specific to your needs.
When taking out a car loan, remember to think ahead with your payments. You will end up paying more interest with a longer term loan but this type may still suit your needs. It is advisable however that you set realistic expectations when it comes to paying back your loan as you don’t want to be paying it back forever. Perhaps limit your financing to three or four years and plan to make monthly affordable payments. Be realistic with what you can afford and avoid extreme long term loans. You may regret making this purchase in the future when you have further payments to make on your car.
Remember these three key parts of taking out a loan and you should have some of the tools you need to make an informed decision on your PPI needs. Take time when selecting your car and loan for a decision without regrets.