Car Loans Made Easy

Author: Vas Kara | Posted: 06-02-2008 | Comments: 0 | Views: 2 |

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Over 2.4 million new cars hit the UK's road in 2007, and the figure is not expected to be muchlower in the year to come. Everyone wants a new car and increasingly people are using loans to afford them. Halifax released figures last year showing that 67 per cent of those taking out loans to buy cars are men, mostly around January and August when the new number plates come out. But what should you be looking for if you decide to splash out on a flash new motor? This article will provide all the info you need to consider when buying a car on credit.

The big decision you must make is choosing the type of credit arrangement you want. There are millions of different products out there, and they are all packed with mind boggling small print and thousands of additional terms and conditions. Obviously you are going to have to get down study them eventually, but the task will be a lot easier if you have some idea of the basic options available.

One popular option is hire purchase. With this method you hand over a deposit, and then pay off monthly installments until the car is yours. Most dealerships will let you buy a car off them this way. The interest rate on hire purchase can vary though, and you should compare the price of borrowing the money elsewhere. Some dealers will look to push you into an arrangement that will not necessarily be the best deal for you, so it is worth looking at the cost of borrowing before you head off to look at cars. The advantage of hire purchase is that the loan is secured on the car, so there is no chance of losing your house if you fail to keep up with repayments.

Personal contract purchase (PCP) is similar to hire purchase in that you put down a deposit and then pay monthly installments. With PCPs though, there is also a lump sum that must be paid at the end of the installments in order for you to own the car outright. This sum, the minimum guaranteed future value (MGFV), is often quite large, but gives you the option of buying the vehicle there and then, walking away with nothing, or switching to another PCP plan and getting a new car. PCPs usually have lower monthly repayments than hire purchase meaning you can afford a better car. They do work out more expensive in the long run though.

Both of these options are available only from dealers, and it can often be cheaper to take out a personal loan. Taking out a loan has the added advantage that you own the car outright from the moment you start making payments. If the loan is secured on your house then there is always the risk of finding yourself homeless though. It is generally cheaper to borrow money from a bank than a dealer, especially if you shop around. But banks are becoming increasingly fussy about who they hand out thousands of pounds to, and it make take some searching to find a cheaper deal that will accept you with a blemished credit history.

The last way of getting yourself a new car is personal contract hire (PCH). The big problem with this scheme is that you never actually own a car, and just rent one off the dealer instead. There are big advantages to this though. The payments are often cheaper than with PCPs or hire purchase, and you always have the option of getting a new car at the end of every deal. If driving a brand new car is a must then this is the deal for you. Maintenance and servicing is often included, and with the second-hand car market increasingly weak, PCHs are beginning to look more and more attractive. There is always a catch though, and unfortunately these arrangements are not widely available.

Once you have worked out which of these plans you think will suit you the best, the only thing to do is to shop around. Price comparison websites are a great way to compare lots of palns at once, and after consulting them and your dealer, you should be able to find the deal that is cheaper for you. Don't get drawn in by flashy introductory offers which cost a fortune in the long run. Use the APR, which calculates the cost of the loan across its entire length, to assess which product will be cheaper in the long run. At the end of the day the more legwork you do, the more likely you are to find a great deal. So do your research, get some comfy shoes on, and good luck.

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Refinancing Mortgage: Low Payment And Low Interest Rates

Author: Rony Walker | Posted: 06-02-2008 | Comments: 0 | Views: 2 |

Those seeking a financial alternatives are often caught thinking that low payment refer to low interest rates. They should be aware that low interest rates vastly differ from low payment. With this in mind, they can veer away from dubious loan agents who will rush them to a new mortgage with high interest rates and add-on fees.

Watch What They're Saying

When it comes to prices and fees, the words "50% off" or "slashed prices" can hook the bargain hunters. The same happens to individuals looking for an affordable refinancing mortgage program. There seems to be confusion because people think that "low" fees or "no closing fees" are for real or even applies to the interest rates.

Unscrupulous companies use these kinds of teasers to lure would-be borrowers, making them believe that they're getting a good deal. And before they can make up their minds, they are maneuvered into an ARM. A month after the contract takes effect, the borrowers are jolted awake to a nightmare. The interest rate has adjusted to a higher rate, and they are paying the fees that were supposed to be non-existent.

If you see these attractive offers, veer away from these companies. Their offers do not add up. Analyze this - the attorney who works on the legalities of the closing of the contract has to be paid. Would the company pay for it from their own pockets? Of course not. They'll have to get the money from you - lumped into your refinance mortgage loan.

Low Payment

A low payment for a refinancing mortgage loan is not about a new mortgage with low interest rates. The said low payment refers to the fees involved in the processing of the loan. You may be paying for the following: origination fee, loan discount or points, appraisal fee, credit report fee, lender's inspection fee, mortgage insurance application fee, assumption fee, underwriting or documentation, mortgage insurance, annual assessment, title charges, and settlement or closing fee.

Borrowers going to the mortgage company should have ready cash on hand to pay for fees that can run in the hundreds of dollars and more. This confirms that refinance is not cheap, nor getting any cheaper. Borrowers should indeed be ready with cash to get more cash. So a low payment mortgage should be reviewed carefully.

Low Interest Rates

Interest is the payment on the money borrowed by the lender. This is how mortgage companies earn their keep. At this time, interest rates are at their lowest and a refinancing mortgage loan is highly recommended, but borrowers should be warned that mortgage companies are stricter with their requirements.

Borrowers can get lower interest rates for their mortgage if they have good credit scores, have been paying the first mortgage amortizations on time, and have a 20% equity on their homes. If you are facing an ARM reset, get a refi to switch to a fixed-rate mortgage. A refinancing mortgage scheme offers you this chance and the opportunity for a cash-out option if you're qualified.

Low Fees and Low Interest Rates

Do take some time to do a little bit research on lower fees and lower interest rates. Some companies do charge lower fees, but find out if these are added up to your monthly amortization payment. Who wouldn't want to pay low fees for a refinancing mortgage and enjoy lower interest rates?

Refinance Mortgage Loan: Shorten Your Loan Term

Author: Rony Walker

A 15-year loan term has many advantages, although it may appear to be expensive because of the higher monthly amortization. However, a shorter loan term assures you that you'll be free from this burden before or at the time of retirement and save thousands of dollars. Consider having your loan restructured to a shorter loan term.

Benefits of a Shorter Loan Term

The prospect of spending 30 years paying back a mortgage is discouraging. If you have 20 years remaining on your loan, the option to shorten your loan term to 15 can be tempting. Taking away 5 years from a 20-year loan means a higher monthly bill, but freedom from the mortgage after 15 years instead of 20 is definitely more appealing. But if it's only a matter of a few hundred dollars more, why not? Never mind if you'll be paying a higher monthly bill.

You'll be saving thousands of dollars from interests alone with the five years knocked off from the 20-year loan term. Another benefit is building your home equity faster. A refinance mortgage loan offers the chance to restructure your terms.

What's Involved

For a home mortgage, the lender will pull your credit record to check if you've been paying your debts on time. You'll also be paying the fees involved before, during, and after your loan is processed.

The lender will assess all the information to evaluate if you are a good risk for a shorter loan term. If you're dealing with the same lender, the process won't be as rigorous and as lengthy like it would be if you go to a new lender.

It's a fact that lenders prefer long-term mortgages because it rakes in more profits. To counter loss in future profits, lenders penalize borrowers for paying their mortgage ahead of term. This is why prospective borrowers should always inquire if the lender charges prepayment penalties.

Assuming that your lender does not charge penalties on prepayment, you have to contend instead with the closing costs for your refinance mortgage loan.

Others get a refinance mortgage loan to switch to a short term interest only loan. They are banking on the equity of the house and intend to sell it in the near future. The proceeds of the sale will go to the interest and they can still have extra money from the profit. In your case, you're looking at the full ownership of your home in a shorter time.

For a new loan, you can decide if you want a fixed rate mortgage or an ARM. An online calculator can compute how much you're going to pay the monthly bill in 15 years' time. From the calculations, you'll be able to determine the feasibility of a short term ARM or fixed rate refinance mortgage loan.

Short Term or Long Term?

A short term, or traditional loan, will always depend on your financial situation and future plans. A short-term refi is ideal now that interest rates are low. You'll be surprised that you'll be paying the same monthly fee as your first mortgage, so there's not much of a change in the monthly bills. The prospect of paying off your loan in 15 years, however, is imminent. For those who feel secure with the stability of the traditional 30-year loan term, switching from an ARM to a fixed rate refinance mortgage loan is recommended.