Car finance interest rates dont seem to have risen as much as they could have done with the Bank of England base rate rises. We have seen 12 base rate rises in the past 18 months which has had an impact on most of our lives, especially where we borrow money.
We have seen a small increase in the rates that we are obtaining for our customers, however, they don’t seem to be proportionate to the increase of what we would expect from the change in base rate over the past 18 months.
Buying a car on finance allows you to purchase that car that you want, without having to have the spare funds available to pay for it in one go. You borrow the money from the finance company any pay it back monthly over an agreed term, with interest charged on the amount borrowed. You can settle car finance early as long as this is in your terms and conditions, which can save you interest in the long run.
What rates are available at the moment?
How long is a piece of string!? Not a very helpful answer that is it… so we will provide context. Car finance is a loan, loans rates are dependant on multiple factors. They are based on your credit score, the amount a lender perceives you to be able to repay each month and also how much risk is associated with providing you a loan. Generally speaking, the best rates are available on cars that are under 10 years of age, with a customer who has a great credit score and can show signs they are able to repay the loan in full, without any distress.
What’s the difference between APR and the interest rate?
Let’s look at APR first. The APR is the annual percentage rate. This is the annual cost to you, as the borrower, for taking the loan. It takes into account any fees that are added to the loan as part of the process in obtaining it.
Interest rate is the amount in a percentage term that you will be charged for taking the loan. Interest rates on car finance are generally fixed and are not variable, this gives you the benefit of knowing that the repayments are fixed and not going to fluctuate with Bank of England base rate changes.
How do we get the best rate for you?
We work with a panel of lenders to ensure you have the best rate available to us. We work with you to ensure that all information is provided to the lenders to ensure that they have everything to make an informed decision. Whether you are rated as excellent or have previously struggled with credit, we will work between you and the lenders to get you the best possible outcome.
For further information on car finance, you can visit our information pages and complete our finance application if you are ready to proceed.