Loans, Insurance & credit card information

There is always a first time for everything including buying a car and a first time buyer car loan can help you do that. You can buy a used or new car with a car loan that is offered by a bank, a financial lender, building society or a financial institution. Car loans are specifically tailored to enable you to buy a car and these are unsecured loans as the value of your car keeps on depreciating rapidly. This is the main reason for the interest rate on a car loan being higher than for any other loan.

You can get a first time buyer car loan from a specialist car loan provider even if you have bad credit, although at a higher rate of interest. When you finalize a deal with a lender for a specific amount for buying a car, you will have to repay the principal and the interest amount every month over the agreed period of time. The first time buyer car loan is a type of personal loan that does not provide any security for the lender.

There are three types of schemes for first time buyer car loans:

1) Manufacturers’ loan schemes: the manufacturers of the vehicles offer car loans either directly or through a dealership. If you wish to trade your existing vehicle, the loan will be for the balance amount but you will become the owner only after you have paid back the loan fully. The car can be repossessed if you falter on the repayments.

2) Hire Purchase: Normally dealers offer this type of loan in which you would virtually be hiring the car from the dealer until you pay back the full loan, when you can get the car transferred in your name.

3) Personal Loan: You can take a first time buyer car loan in the form of a personal loan that, if used specifically for buying a car, can get you some incentives such as free car insurance, breakdown cover or discounts on buying car accessories. The interest rate on a personal loan is normally lower than for the other two types of loans.

A Word of Caution

When you go in for a first time buyer car loan you should take a simple interest loan that means that your interest liability will only be on the original principle loan amount. Moreover, you should never agree to pre-payment penalties as you do not want to pay a penalty if you decide at a later stage to get money through refinancing and pay off your car loan. You should also never agree to take a pre-computed loan, as you will be legally bound to pay the entire balance of the principal loan amount along with the entire interest that would be levied throughout the period of the loan.