Understanding more about the car finance market is key to finding the best car loan deals for you. You need to know what the main finance terms are, so that you can work out exactly what each loan deal means. If you do not understand parts of your loan deal, then you could be agreeing to something that is unsuitable for you or costs you more money than you realised.
You can research more about finance easily online. You will only need to learn those main terms that will apply to APR products when you are looking for the best car loan deals. Most car loans are straightforward but if you are not used to credit products, then some words may be unfamiliar to you. Take the time to look up anything you do not understand. Don’t be afraid to ask the loan provider more questions to clarify any points on each loan deal you look at.
Car Loan Glossary
There many common terms used in the credit markets. Here are just a few basic terms you may come across when you are looking at the best car loan deals:
• APR (Annual Percentage Rate) – this is the amount at which the loan will be offered to a consumer. All APR includes all interest charges and associated costs where the details must be provided for loans and if you are unsure, you need to contact your lender for more information. Part of finding the best car loan deals is comparing APR offers from lenders.
• Base Price – the base price is just the standard sale price of a vehicle before any optional extras are added such as Sat Nav, alloy wheels, extended warrantees etc.
• Breach of Contract – this is something everyone who signs a loan agreement needs to be wary of. Each loan is a commitment between the lender and the borrower. If either party fails to carry out their responsibilities then it could result in a breach of contract. This could happen if you were to miss any of your monthly repayments on the loan and could land you with some serious financial problems.
• Guarantor – sometimes a loan provider may require you to have a guarantor before they will accept you for one of their best car loan deals. This can occur if you have a ‘less than perfect’ credit history or no credit history at all, at the start. The guarantor would agree to pay the debt remaining from the loan, if you are suddenly unable to meet your responsibilities.
• Installment Plan – many of the best car loan deals are based on installment plans. This means you would be able to pay off the loan in regular monthly installments over a specific time period.