When it comes to buying a new car, there are several financing options available to you. Thousands of people a month are searching for high street ‘car loans’ like a Santander car loan. But did you know that a car loan from a high street bank is a personal loan? Let’s dive deeper into the benefits and drawbacks of this financing option.
What is a Personal Loan?
A personal loan is a form of credit that can be used for almost any purpose, from consolidating debt to financing a home renovation or buying a car. Unlike auto-specific loans from dealerships or dedicated lenders, like the ones we at JDR Automotive can put you in touch with, personal loans do not necessarily come with stipulations regarding their use. This flexibility is one of the primary reasons many opt for high-street banks when seeking vehicle financing.
Benefits of Santander Car Loans (and other high street personal loans):
- Flexibility: The standard feature of using a personal loan for car finance is its flexibility. You are not restricted to any specific make, model, or dealership. Meaning that you can choose a new or used car from any seller. Did you know our finance partners can help you secure a car loan for used cars? Make a no-obligation enquiry here.
- Fixed Interest Rates: Most high street bank loans, including Santander car loans, come with fixed interest rates. This means your monthly repayments will remain the same throughout the duration of the loan, making budgeting much more straightforward.
- No Collateral: Unlike some auto loans where the car serves as collateral, personal loans are often unsecured. This means that, in the event of non-payment, the bank doesn’t have an immediate right to repossess the vehicle.
- Early Repayment Options: Some high street bank loans allow you to repay the loan early without incurring additional fees. This could save you on interest if you repay the loan sooner than anticipated.
Drawbacks:
- Potentially Higher Interest Rates: Since many personal loans are unsecured, banks might charge a higher interest rate than secured auto loans. It’s essential to shop around and compare rates before making a decision.
- Credit Requirements: High-street banks, like Santander, can be stringent with their credit requirements. Those with a poor credit history might find getting approval challenging or face higher interest rates. If you’re concerned about your credit rating, submit an enquiry with us, our finance partners offer competitive rates for people with less-than-perfect credit scores.
- No Added Perks: Some car loan specialist lenders provide additional benefits like extended warranties or service packages. With personal loans from banks, these perks are typically not included.
- Possibility of Overborrowing: Since personal loans don’t come with restrictions, there’s a temptation to borrow more than the car’s value, leading to potential financial strain.
In Conclusion:
Like many high street personal loans, Santander car loans offer immense flexibility and can be an excellent choice for those who want a straightforward financing option without restrictions. However, as with any financial decision, assessing both the benefits and drawbacks tailored to your circumstances is vital. Ensure you thoroughly research, compare rates, and understand the terms before signing on the dotted line. Investing time now will ensure a smoother ride (pun intended) in the future!