If you're in the market for a new car, chances are you will need a car loan to finance its purchase. You can also use a car loan to finance a used car. The key is to be sure of what you can borrow, and to work out how quickly you can pay off your debt.
A car loan works on the same principle as other types of credit. You take out a car loan through a lending organisation, such as a bank or the finance agent of the vehicle dealer where you buy the car. The company offers to lend you money to purchase the car and you agree to pay back the amount you have lent via monthly payments, plus interest. Unlike an unsecured loan, car loans are secured against the car.
A car loan is often one of the largest financial commitments after a home loan, so you should carefully consider the choices and understand what you're getting into before you sign on the dotted line.
So if you're setting up a car loan, read on. This guide to arranging your car loan is packed with tips to help you define how much you need to borrow, minimise your loan costs and help you compare loans effectively.