car loan

Car loans are generally taken by individuals as opposed to businesses and can be used to finance the full cost of the purchase including the on-road costs and insurance.

A car loan differs from a general personal loan in that it is secured against the new car. This means that when the vehicle is disposed of (sold, traded in, written off by the insurance company) the car loan must be paid out. The advantage is that interest rates are generally less for car loans than what you would expect for a personal loan. This is because the finance company views it as less of a risk than a personal loan (due to the fact that if you default on your car loan, the finance company will as a last resort attempt to reposes your car whereas with a personal loan they can’t do this).

A car loan is paid off by regular repayments which depend on the amount borrowed, term (usually up to 5 years), the interest rate and, if applicable, the residual (remaining amount on the car loan at  the end of the term).

Please note: We are not able to offer advice regarding car loans and whether they suit your circumstances. The information given here is for information purposes only.