Specialised loans come in many forms, providing loans for cars, holidays and even for home maintenance.
It’s is important if you are looking to buy a car to take a look at the loan options in our comparison chart before you agree to deals at the dealership. You will often find that a car loan will be a better option that those offered to you by the dealers, but always check the eligibility criteria before you apply. With most car loans you can borrow between £1000 and £25000 to be repaid over the duration of the loan.
The eligibility criteria for most car loans differs between lenders, but the basic criteria states that you should be 18 years of age or older with a bank account that allows you to set up a direct debit.
Conditional Sale and Personal Contract Purchase
A conditional sale is also known as a hire-purchase sale, where a trustworthy dealership, and some brokers, can arrange for you to pay a deposit (usually 10% of the full value of the car) and then you pay monthly instalments in order to pay off the car’s value in full. Once you have paid the final instalment, after a period of 1-5 years, you officially own the car. This is a form of secured loan, with the car being the asset used in case of failed repayments.
A hire-purchase sale allows you to put down a relatively small deposit with flexible repayment terms. However, even though the interest rates are fixed, the longer you take to fully repay the car’s value, the more interest you will pay.
A personal contract purchase follows similar principles to the conditional sale, except that you can put off paying a part of the loan until the end of the loan duration. Once you have reached that duration you can pay the amount you put off, buying the car in full, you can give the car back and trade it in for an alternative, starting a new loan from the beginning, or you can hand the car back altogether. This allows you to have lower monthly costs for the repayments and you can choose to leave the deal and the car, or pay to keep the car.
Personal Contract Hire
The personal contract hire, or personal leasing, options allows you to rent the car over a set period of time, with you paying a financing company sourced by the car dealership. The only downside to this loan option is that at the end of the loan period you do not get to keep the car, however you do not have to deal with car price depreciation.
A holiday loan is a last resort for funding a holiday if your savings cannot cover the costs. A holiday loan is a personal loan and therefore has no collateral placed against it, just your promise to pay the money back.
Eligibility criteria changes from loan to loan, but each lender stipulates that you must be 18 or over, and in possession of a UK bank account with a debit card that is still valid. On top of this you must have a way of assuring the lender that you are trustworthy and can repay the money lent to you on time and in full. A perfect credit score will help you apply for the more competitive loans from the bank or supermarket. Without a perfect credit score it is not wise to apply for the competitive loans as you will be rejected and your credit file will suffer as a result. If you do have bad credit then it may be better for you to apply for a spending abroad credit card, allowing you a more flexible way to borrow, and reliable way to manage, your money before and during your trip abroad.
Make sure to check out our comparison chart for holiday loans to ensure you get the best deal.