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UK law dictates that you can cancel certain car finance types before its term. Also referred to as a voluntary termination, this is meant to protect those people that took out a finance agreement but are no longer able to afford the regular repayments.
There are a number of instances when this could happen. For instance, you may have lost your job or there may have been changes to your financial situation that is preventing you from making your monthly repayments in time. If you have taken out a motorcycle loan, depending on what type of financial agreement it is, you may be able to get out of the agreement.
Personal Contract Purchase Finance
Also referred to as PCP finance, this is where you are required to make an initial deposit along with a series of monthly payments. Agreements like these can be terminated provided that you have already paid at least 50% of the finance total back. If you haven’t repaid 50% yet it is still possible to get the agreement ended as long as you get the difference paid off.
Hire Purchase Finance
Also known as HP finance, this is where you’re required to pay around 10% deposit for the car and then you pay the monthly repayments afterwards. Just like PCP agreements, HP agreements can be terminated early by repaying at least 50% of the total no credit check loan. You can make up whatever is the difference if you have not reached the 50% repayment yet and then have the agreement cancelled.
Whilst voluntary termination is going to appear on your credit file, it should not have any effect on your credit score. This is why it is the smarter route to take if you’re no longer able to afford your loan, instead of just stopping to pay your financial obligations abruptly. It is always very tempting to stop paying but it can harm your credit score big time so it is best to go the legal route.
From the name itself, mobile loans are basically just personal loans that you use to buy yourself a car. However, unlike most personal loans which are unsecured, car loans are, more often than not, secured. This means there is a collateral that will be repossessed if you fail to make the payment. In most cases, the collateral is the car, itself.
If you’re to car loans, you may be feeling overwhelmed and may not know how to proceed from here. Here are the top 4 things you need to know about auto or car loans.
What is the loan gonna cost you
Much like any loans, the cost is comprised of two things: the principal amount as well as the interest fee which is calculated using the interest rate. The principal is main amount that you will need to pay for the car while the interest is basically the money you pay for borrowing.
The interest rate
When looking for payday loans, you need to assess the interest rates. High-interest rates will cost you more. Usually, the rates are in percent and is also known as the Annual Percentage Rate.
Your down payment
When taking out a car loan, you are usually expected to cash out your down payment. This is a certain amount that you will pay immediately when you buy your car. Usually, the required amount is a percentage of the total loan amount. It is to deducted from the total amount which you will pay monthly.
When shopping for car loans, it is important you assess the terms and conditions of every loan. Compare and contrast to see which is best for you. Included in these are the time frame of your loan, your car insurance, what happens during accidents. I highly suggest that you go through every condition before signing.
Before signing, always check the reputation of the lender. Never sign unless all terms and conditions that I mentioned above had already been finalized.
Long-term car loans generally look very appealing, especially for first-time car buyers who are excited to buy their first automobile. Two of the most common car loan periods are for 72 months and 84 months. The usual thinking is that when a loan is spreaded out through a longer period, the less monthly payments you will have to make. And while that is true, here are several reasons why a 60-month car loan term trumps the former.
Long-term loans can deceive you into thinking that you paid less.
Sometimes, car dealers try to distract you from the overall cost by overemphasizing a less monthly payment. However, unbeknownst to many, these can create more financial problems as car dealers don’t usually open up about how long term loans come with interest rates that can increase over a long period of time. In addition, take note that a car value can deteriorate over time. Just imagine having to pay for a car that is already 10 years old.
Your loan is worth more than the value of your car.
Since the overall cost of your car increases when the loan term is longer, once you calculate, you can actually see that the total amount of money you owe is now way greater and bigger than the car’s worth. Remember, that the less long your loan term, the faster equity will buildup in your mobile.
Interest rates can spring highly after 60 years.
Interest rates always change, more so over a long period of time. When this happens, they usually change for the worse. This means interest rates increase a lot, most especially after 6p years. Once you’re past the 60 years, you are probably paying a way bigger interest. If you add all the cost, it’s going to amount to a price that is way more and bigger than your car’s value.