How to Get a Low Interest Car Insurance Loan in the UK

Is it better to get a car loan from your bank or dealership?
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How do you get a low interest car insurance loan in the United Kingdom?

What’s a good insurance interest rate for a car loan? The average loan interest rate on a 60-month new car loan is 4.36%. However, borrowers with excellent credit pay a lower rate of around 3.724%. If you have a score lower than 720, you’ll pay an average of 5.098%.

The financial challenges that many people face tends to render them bankrupt at some points.

With the rising costs of gas prices and other economic downturns like job scarcity and higher costs of living, the last thing on your mind would be to get a new car.

But, we can never dictate how things would turn out. Your vehicle might break down for the last time, and refuse to “come alive” even after the most experienced mechanic has done his best.

In such a situation, you would be forced to buy a new car, even on a tight budget.

Sourcing for a car loan could be a veritable approach to finance your new vehicle, pending when you raise some funds to keep paying back the loans and the accrued interests.

On that note, before you take out a new car loan, you would need to be aware of some factors that should be considered your car loan negotiations in the UK .

How Do You Get a Low Interest Car Insurance Loan?

1. Tighten Up Your Credit Score

Your Credit Score or Rating is the first thing the insurer would like to go through before considering your car loan request.

The Credit Score is like a “mirror or reflection of your indebtedness and how you handle the same.” If you’re like many prospective car loan applicants that maintain a poor Credit Rating, then your request might be turned down.

Instead, begin to work on your Credit Score by paying off any little debt you have acquired. With a perfect rating, you would be able to get the lowest interest rates on your car loan.

2. Negotiate on the Price of the Vehicle

Can you negotiate interest rates on car loans? While you’re looking for the best car insurance interest rates from the insurer, you also have to play your part by seeking for the best deals on your vehicle of choice.

Negotiating with the auto dealer is an excellent way to cut off some chunks of money from the actual cost of the car.

In some other instances, if the car dealer stuck to the sticker price of the vehicle, you might want to check with some other dealers. The general rule is to get the right dealership that is willing to offer you the best and affordable insurance quotes and rates on the vehicle you desire.

3. Borrow Higher or Don’t Borrow at All

There’s a misconception about insurance that smaller car loans are easier to pay off. That might not be out of place, but you must understand that the lender, such as the bank, wouldn’t like the idea.

This is because banks and other loan issuers make profits when the amount borrowed is higher, and the duration is extended. They don’t want something that you can pay off in two months.

So, if the price of the car you’re targeting is something you can pay off in a couple of months, then you might want to save up for it instead. That way, you would avoid the higher interest rates accruable to short-term loans.

4. Get a Co-Signer

Most times, the need for a co-signer or guarantor arises when the borrower doesn’t have a good Credit Score/Rating. It is not usually so in all cases.

Related: How to Get Money Quickly to Pay Rent If You Are Behind

Sometimes, the tagging of a co-signer lets the lender know that you’re willing to pay off the debts in due course. When you don’t, the lender already has another person (the co-signer) to turn to for the money.

5. Make a Large Down Payment

How to get low interest rates for your car loan in the UK
Car insurance loan application

Indeed, lenders are looking for more borrowers because that is one of the ways they increase their profits. Yet, they don’t mind turning down some loan requests as they please.

Therefore, if you must “win your way into the heart of the lenders,” then you have to make some commitments in the form of a down payment. That is an indication to the lender that you’re willing to get the loan.

6. Lease the Car

When the “worse comes to worst,” you might consider leasing the car instead of making an outright purchase. A thin line demarcates both, and you need to understand that before commencing.

Buying a car with the car insurance loan implies that you would be paying for the loan and the accrued interests even when you don’t use the vehicle. Leasing the car, on the other hand, implies that you only get to pay for the car when you use it.

Related: How to Obtain a Car Title Loan

In light of that, you might consider leasing the car or vehicle if you don’t intend owning the vehicle. The leasing option is advisable for “car enthusiasts/freaks” that wouldn’t mind hitching a ride in the last automobile models in town. By leasing, you only get to pay when you use the car.

Time to Get a Low-Interest Car Insurance Loan

The hassles of buying a new car and footing other associated bills while working on a budget can be avoided by getting a car insurance loan. While at that, you have to put the ideas above to good use to ensure that you don’t end up paying more when you could have paid less.

Related: How to Use Allstate Auto Loan Calculator

Is it better to get a car loan from your bank or dealership? You would get the best dealership and the most affordable car insurance loan when you begin to implement some of the tips offered above. Don’t forget to let us know when you get your new ride.

Chukwukadibia Abah
CHUKWUKADIBIA ABAH is a passionate freelance writer and contributor to Entrepreneur Business Blog. You can follow him on Twitter - @chukwukadibia01

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