Can I get vehicle loans in the UK?
Yes, you can get a loan to purchase a car. There is no problem if you do not have the money in hand to pay the car price outright. A loan can be obtained to manage the cash shortage problem.
Get an overview of vehicle loans in the UK right here!
Table of Contents
- What defines a vehicle loan?
- What is it like getting it from a direct lender?
- Can I use the loan for both new and used vehicles?
- Key features of vehicle loans
- Types of vehicle loans in the UK
- New car loan
- Two-wheeler loan
- Used car loan
- Commercial vehicle loans
- Eligibility criteria
- Required documents
- Application process
- Approval process
- Repayment structure
- Repayment terms & interest rates
- Prepayment option
- Direct lender vs dealer finance
- Alternative financing options
What defines a vehicle loan?
The first thing to note here is “What is a vehicle loan?”. This is a personal loan meant for funding the purchase of a car. When you do not have enough cash for the purchase, these loans can help you portion out the cost. These loans let you repay later while having the necessary funds upfront from the lender on approval.
What is it like getting it from a direct lender?
Once you know the right financing option to consider for this purpose, you will be curious to identify the lending source. How does a direct lender facilitate it in the UK?
- Round out an online application only
- No involvement of any broker
- Speedy disbursal of funds happens
- Receive funds in your bank account
- Face competitive rates of interest
Can I use the loan for both new and used vehicles?
Yes, this is a loan for new and used cars. They come with flexible offers. Based on your budget, you can get a used car to lower your financial burden.
What are the key features of vehicle loans offered by a direct lender?
- Borrow money to buy the car upright
- Get loans at realistic rates
- Manageable repayment patterns
- Loan amount is regulated by income and creditworthiness
- Longer terms with lower monthly payments
- No personal deposit will be required
- Get better rates with larger deposits
- Online mode of application is practised
- Loans take less time to respond
What types of vehicle loans are available in the UK?
Based on your requirements, budgets, and credit scores, you can see several types of vehicle loans:
- Unsecured personal loans: Get immediate possession of the car with unsecured car financing meant to plug a small funding gap to complete the purchase transaction.
- Hire Purchase: You must pay a deposit followed by monthly instalments. Get car ownership once loans are paid off completely.
- Personal Contract Purchase: A Deposit will be necessary. Pay monthly instalments, but based on the depreciating value of the car. Buy, return, or exchange the car after completion of payment.
- Personal Contract Hire: You can lease the car and never own it. It would be for a specific duration.
What is a new car loan?
This is finance for new cars that can be obtained through these loans. You can get them to own a car that has not been driven before or has not been registered yet. Maintenance cost is going to be low as they are brand new vehicles.
What is a two-wheeler loan?
This is basically two-wheeler finance to purchase bikes or a scooter. Use them to portion out the cost of purchasing. Repay in the form of instalments over a defined period instead of paying back in full.
What is a used car loan?
Get this second-hand car finance to buy a car that has already been driven. The cost of purchase can be lowered with the help of this loan option. However, these loans come with high interest rates as the resale value will fall over time.
What are commercial vehicle loans?
When you have to purchase a vehicle for your business, you can take out a commercial vehicle loan. Get them to buy either new or used cars. The rate of interest might be competitive if your business plan and revenue are convincing.
What are the eligibility criteria for getting a vehicle loan?
- You must be 18 years old
- You must be a permanent UK resident
- You must have a stable source of income
- Your bank account should be active
What documents will I need?
Documents required for a car loan are valid proof of ID, like a driver’s license, address, income, and bank statements. Your pay slips and tax returns will also be required to assess your income and repayment capability. Your credit report will also be validated.
How do I apply for a vehicle loan from a direct lender?
- Identify your necessities, i.e. the loan amount you might need
- Review your credit scores
- Get pre-approved online offers from different lenders
- Compare the loan offers to find the best loan deal
- Submit the full application
- Receive the approved sum of loans in your bank account
How long does the approval process take?
Car loan approval time does not unnecessarily stretch. You can get a speedy response from the lender based on your application. Make sure that you have made no mistakes in the loan application. In some cases, the processing time does not exceed a single day.
How is repayment structured for a vehicle loan in the UK?
Repayment is designed to happen as monthly instalments. Thus, you will not have to bear the burden of paying off the full amount in one go. For your convenience, the entire amount will be broken down into small portions.
What are the terms of repayment and interest rates?
Car loan repayment term will vary from 1 to 7 years. The span you will get will depend on the amount you borrow. Besides, your financial capability will be responsible for deciding the loan amount. The interest rates will depend on the loan type you choose. Your credit scores might have a small role to play in determining the cost. Besides, you can get better rates with new cars, unlike old ones.
Can I prepay my vehicle loan?
Yes, early repayment on a car is possible. You do not have to worry about paying any additional fees for paying back in advance. As reliable lenders, we will have no problem letting you pre-pay.
Why choose a direct lender over other financing options?
| Direct lenders | Dealer car finance |
|---|---|
| Get loans from online lenders | Get loans from car dealer via partner finance |
| Apply online comfortably | Apply at the time of purchasing |
| Get immediate ownership | Depends on the type of finance |
| Competitive rates | High rate of interest |
| Controlled borrowing | Dependent on the dealer |
What should I do if these loans do suit me?
In that case, you must consider getting alternative loans for car finance in the UK.
- Personal loans: Get a personal loan for buying car by covering the remaining amount of the purchase price.
- Short-term loans: Use a short-term loan for car deposit as they come with a lot of flexibility.
- Loans for bad credit: Get a bad credit car loan from a direct lender by establishing your affordability.
- Debt consolidation loans: Merge debts by using a debt consolidation with car finance to reduce monthly payments.
John Milton is an experienced financial writer and personal loan expert with years of experience identifying the right category for people. He has been Chief Financial Expert at LoanChester in the UK and provides insights on the big deals of the lending institution. He is known for transforming the loan policies as per the unique needs of different borrowers. First, he focuses on what the borrowers require according to their favourable and adverse financial stances, and then he focuses on making a variety of personal loans affordable. John writes well-researched content on personal loans and also guides borrowers regarding their unique financial conditions. John holds a Ph.D. degree in banking and finance.
