Loans: £2,000 - £40,000
Rates from: 6.9% APR
Representative: 14.8% APR
Rates from as low as 6.9% APR, representative 14.8% APR. Loans from £2,000 to £40,000. Finance is subject to status and is only available to UK residents aged 21 and over. Carmoola is committed to responsible lending. All information is subject to change and should be checked before completion. We earn a commission if you make a purchase at no additional cost to you.

what is an auto loan?

an auto loan is a loan that you take out to purchase a car. auto loans are secured loans and come with standard borrowing requirements. you will need a favourable credit score and enough equity in your home or other assets to collateralise the loan and secure it against default.

one common requirement for any loan is repayment. an auto loan is an easy way to get the money you need to buy a new or used car or to refinance an auto loan. however, they can be risky if you don't know how to handle them.

an auto loan lets you borrow money from an institution, such as a bank or credit union, so that you can use it to buy a car. when you take out an auto loan, the lender gives you money in exchange for an monthly payment including an interest rate.

how much will an auto loan cost me?

you can use an auto loan calculator to calculate the approximate cost of the loan for your new car. like the loan amount or the monthly loan rate. the interest rate on your loan, also called the apr or annual percentage rate, is the amount you pay each year for the money you borrow in addition to the cost of the car.

auto financing typically comes with various fees, making the final cost of borrowing money challenging. most lenders charge interest on the loan and fees for their services.

some auto loans also have an origination fee, usually charged when you take out your loan. however, other fees come into play in addition to these costs.

for example, lenders may require you to put down a certain amount of money at the start of the loan to secure it against default. they may also need you to pay for insurance on the car you want to purchase or its maintenance. some providers also charge late fees or penalties when you put off payments past due dates.

what do i have to consider with an auto loan?

auto loans are a type of secured loan that requires collateral. this means that your car is the asset you use to secure the loan, and if it's lost or damaged, you are still responsible for payment. therefore, it would be best if you had something of value to collateralise an auto loan.

you can consider an auto loan if you have a vehicle sitting on your property and you want to use it as collateral for a loan. however, if you don't have anything of value, another asset could also be a good idea.

an auto loan is not just for new vehicles. you could even finance old or used vehicles with an auto loan. in many states, this would allow an individual to get an older, used car without paying sales tax like they would with a purchase from a dealership.

what types of auto loans are there?

there are two types of auto loans: standard and secure. a standard auto loan is a loan in which the lender makes an unsecured and non-collateralised loan. unlike a secured loan, this type of loan comes with no requirements for collateral. standard loans come with higher rates, less strict terms, and fewer restrictions than other types of loans.

a secured auto loan is a loan that has been collateralised by assets such as your home or vehicle. in exchange for repayment, you give up ownership of these assets as collateral to secure the loan. secured loans have lower rates and stricter terms than standard ones. however, they also offer more protection from default because the lender will take possession of your property if you fail to repay the loan.

what requirements do i have to meet to get an auto loan?

if you have a good credit history and other assets to secure the loan, you can get a good auto loan from most lenders. citizens or permanent residents also have a more promising chance of getting an auto loan.

the general requirement for getting an auto loan is to pass a credit check. you also need to meet the lender's requirements on collateral. the bank will want to know that you have enough equity in your home so they can guarantee the loan against default if necessary.

some providers may require proof of income and employment, such as pay stubs. they might ask for personal references.

lenders might also ask for proof of other assets, such as a car or boat, if your home isn't enough to cover the debt.

how much auto loan can i get?

there is no set limit on auto loans. the provider will be the one to determine the maximum amount you are eligible for. the amount of money you can borrow will depend on your credit score, the equity you have in your property, and other factors the financial institution may consider.

you will also need to provide personal financial details so that the lender can assess your ability to repay your loan and make sure there is enough collateral for the loan in case of default.

which auto loan is the cheapest?

when looking for an auto loan, you should consider the interest rate on the specific loan. the interest rate is the cost of borrowing money and directly affects how much you repay the lender over time.

additionally, you can qualify for a low-interest auto loan. that means it will be cheaper in the long run because you will pay off your car faster. an excellent way to get an auto loan with a low-interest rate is through a credit union. these organisations offer loans at meagre rates as they prioritise their customers' needs.

what tips are there to make the auto loan more favourable?

several tips can help make your auto loan more favourable. these include:

  • providing your bank info upfront.
  • knowing what type of loan you're getting and doing the math to determine if it's a good one to take out.
  • keeping track of your debt payments. this helps you determine whether or not the loan is too much for you to handle responsibly.
  • paying early and in full.
  • if you pay off the entire balance, you avoid interest on the loan.
  • being honest and truthful with the lender. you should always be honest about your current financial situation and other debts so there are no surprises when funding a car from an auto loan.

how quickly can i get the auto loan paid out?

many factors influence how quickly you can get the auto loan paid out. the time it takes for your bank to process your paperwork and the loan's interest rate will all affect how quickly you can get cash.

even the time you have to wait before receiving your car will impact the waiting period. additionally, consider taking out an auto loan online. in that case, you'll have less wait time because paper processes won't need to be followed as closely.

auto loans also come with standard borrowing requirements. for example, you'll need some equity in your home or other assets to collateralise the loan against default and secure it against foreclosure.

another factor that impacts how quickly an auto loan is paid out is the applicant's credit score. suppose you need a stronger credit score. in that case, lenders are likelier not to give you a loan. this means there will be a longer waiting period before they process your application and issue funds.

when can i repay or reschedule or increase the auto loan?

many car loans come with a specific repayment period. this means you have to repay the loan in a certain amount of time, usually at typical interest rates. in some cases, your loan may be for a fixed term of years, meaning you owe the total amount within the specified time frame and must be repaid in full.

you can also increase or extend your loan terms by repaying it sooner or paying more on top of what you originally owed. suppose you want to make extra payments on an auto loan. you should speak with your lender about availability and restrictions in that case.