How To Drive Off With The Best Car Loan
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In the market for a new car? There are several ways to finance it but, for many, a personal loan will be the most straightforward option. You can borrow between £1,000 and £25,000 (sometimes more) with a personal loan at one fixed rate of interest over an agreed term.
We’ve rounded up some of the best car loan deals available (July 2022) on borrowing ranging from £3,000 up to to £20,000. There’s a caveat in that you’ll only be matched with these leading deals if you have a top credit score. However, applying through an eligibility checker won’t leave a trace on your credit report.
Car loans between £3,000 and £4,999
Car loans between £5,000 and £7,499
Car loans between £7,500 and £14,999
Car loans between £15,000 and £20,000
* Based on a settlement figure as set out under the Consumer Credit (Early Settlement) Regulations 2004. This states that if you have less than 12 months remaining of your loan, providers can charge up to 28 days’ interest. An extra 30 days’ interest can be added on if there is more than one year of the loan term remaining, taking the total maximum penalty to 58 days’ interest.
How did we rank the car loans?
We looked at the best loan deals based on borrowing of between £3,000 and £20,000 with interest rate (measured by representative APR), as the primary factor. We also considered any perks, early repayment charges, borrowing terms and any late payment fees.
While loan deals are correct at the time of publication, rates and deals can change. The best deal for you will also depend on your credit score and personal circumstances.
Choosing a loan for your car purchase
When you take out a personal loan, you’ll borrow a sum of money from a bank or other finance provider. You’ll then pay it back, with interest, over an agreed number of months. Most personal loans come with terms of one to seven years.
Once the money has been credited to your bank account (often on the same day), you can use it for anything. For example, to pay for a holiday, clear more expensive debts – or buy a car.
Many providers list specific ‘car loans’ – but these work in the same way as other personal loans, just with the stated purpose of buying a car. You can find more on this with our Frequently Asked Questions (FAQs – see below).
What are the advantages of a car loan?
Buying a car using a personal loan comes with several advantages compared to other kinds of borrowing.
First off, the loan translates into cash which means you can buy the car from anywhere – privately, from a dealer, or direct from the manufacturer.
You will also own the car from day one, as the loan will be completely separate to your car purchase. This means you can modify the car or sell it whenever you want (although you’ll still need to repay the loan, of course).
As the loan is unsecured, the lender can’t take possession of your car in the event you default on a payment. However, you should always make your loan repayments in full and on time. Failing to do so will damage your credit score, which lowers your chances of being accepted for credit in the future.
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