There are many options when it comes to taking out a car loan, including several different payment options and ways to save costs, depending on your situation and credit history.
Your credit score and full report play a big role in how lenders will deal with you and what terms you’ll offer. Car lenders will advertise different products based on your credit rating — which means that you could see a very different repayment plan to someone else with a higher credit score!
There is no one answer for what car lenders expect to see, but a credit score above 700 is normally expected. Car loan lenders, as with most credit providers, are expected to evaluate your risk level before they accept your loan application — which is why your application is reviewed in detail.
Some lenders will advertise car loans with no deposits, which means you begin by repaying monthly or weekly without the deposit amount included in the repayments. The downside is that the overall cost will likely be much higher, as you haven’t proven your ability to repay.
Your interest and repayment period will change depending on your lender, credit report and deposit/security. Compare what you find with other lenders on the market before applying based on an advertised deal.
Spreading your loan over a long time is a good idea for avoiding high costs in the short term, but it may cost you more overall. Whatever you decide should be based on what you can afford to pay weekly, as not meeting repayments will end up costing you the most.
Most loans will also have establishment and other associated fees, such as warranties or break fees if you finish repayments earlier than agreed or stop paying altogether. Legally, your lender must give you full disclosure on all costs before you sign up for any loan agreement.