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Is a Car Loan a Good Idea?
Is a Car Loan a Good Idea?

Is a Car Loan a Good Idea?

Getting any sort of loan is a decision that we should think really carefully about. There are lots of types of loans and reasons for getting loans and so there is not one easy answer as to whether getting a car loan is a good idea. However, there are different factors that you can look into in order to help you to decide whether it might be a good idea for you.

Do you need a car and is it the right price?

The first thing to consider is whether you really need a car. It might be that you already have a perfectly good car but you just want to upgrade it and then maybe in this case you should wait and save up for a new one. However, it might be that you have no car and you need one for work and so have no choice but to get one.

If you have any savings, then it is wise to use these to pay for the car rather than borrowing as this will be a lot cheaper. If you do not have savings then you need to think about how much you want to pay for a car. Cars vary a lot in price and the cost does not always reflect the reliability. If you know a lot about cars then it will make it easier for you to pick one that is good value for money. If you do not then it can be wise to take someone with you when car shopping ho does know. I you do not know anyone then it is possible to pay people to take a look over a second-hand car to see whether it looks to be good value for money. If you are buying a brand new car, then you will be research that particular brand and model online to find out more about reliability and how the prices compare with others. To some extent you can do this with second-hand vehicles as well as you can see which brands are more reliable, but obviously you may not be able to apply that generalisation to individual vehicles as it can depend on how well it was looked after by the previous owner.

Can you get a loan and how expensive are they?

If you do need to borrow then you firstly need to find out if you can get a loan. If you have a poor credit rating then you may find that you will not be offered a loan. If you are out of work, you also may struggle to get a loan. In this case, you might need to look for a quick payday loan too fund your purchase.

Assuming that you are able to get a loan then it is really important to make sure that you get the right one. There are many loan types out there which might be suitable for buying a car but you need to think about which will suit you the best. Obviously, you will not want to pay more than necessary but it is also good to take a look at how much each repayment will be and whether that is something you will be able to afford and how long the loan will last. If the loan lasts longer, then the repayments will be smaller and more manageable but it will be more expensive. It is also easier to predict whether you will be able to afford repayments if you look at the short term compared with the long term. You know what your current financial situation is and If you can afford the repayments but predicting the future is tricky. You never know what might happen work wise or family wise or whether you might not be able to work through illness. You also want to make sure that the loan is repaid before the car needs replacing as you do not want to have to get a second loan to pay for a car when you are still repaying the old one.

Is the loan right for you?

It is therefore worth thinking about whether the loan that you choose will suit you and your situation. With different options you should have some choices. For example, some people choose to take out a loan with the dealer. This can sometimes result in a reduction in the price of the car or you may be able to get interest free credit. However, this is not the case with all dealers, some can be dear to borrow from. You might decide to go with a bank or building society and you could get out a personal loan and then make regular repayments. You may rather put it on a credit card. Often a dealer will charge more if you pay this way so do be careful. This is a more flexible way to pay as you can choose when you repay it, but it can be a lot more expensive. You might decide to pay in cash or by debit card and use an overdraft to pay for it. This is really expensive, especially if you go over your agreed overdraft amount. It is therefore important to carefully compare your options.

Is Remortgaging Possible if you are near to Retirement age?

Is Remortgaging Possible if you are near to Retirement age?

As we get nearer to retirement age, then out financial options could be limited. This is because we often need an income to be able to borrow money and so if that income is ending then we may not be able to borrow. Remortgaging could be the same as lenders will want to see that we will have a good income coming up to retirement in order to afford the mortgage payments..

What is remortgaging

Remortgaging is when we change the mortgage that we have. This can happen when we move house and we might change the amount that we borrow as well as changing our lender. It can also happen while staying in the same house, when we change the lender that we are with.

There are many reasons why we might decide to change lenders. It could be that we have found one that is a lot cheaper and so want to save money. It could be that we want one with a local branch or with better customer service. It may be that a friend or family member has recommended one which looks a lot better than your current one. Some people decide that they do not like their lender, perhaps because of their ethics or stories about them in the news. This is an individual thing and many people do choose to change their lender at some point during the term of their mortgage. It can often be because they can get a cheaper price. Sometimes we get a fixed price deal to start with and then when we move onto the variable rate it is not competitive and so we want to change to a lender with a better rate.

Why might age effect it?

A mortgage is very long term loan and can often last around twenty five years. This means that lenders want to look into the future and make sure that they are happy that you will have the funds to make the repayments all the way through the term of the loan. If you are reaching an age where you may be returning soon then it is likely that you will see a drop in income, with your earnings going down so you will be receiving a pension rather than a salary. Often a pension is a lot less than we would earn on a salary. It could be that you have a joint mortgage and one of you will be at this stage before the other.

Your current lender, will not review your situation and obviously was happy with the risk when they took you on. However, a new lender may reassess things. They may not just look at your income and the possibility of retirement making it lower but they could also look at your age and the possibility that you may have to stop work through ill-health before you reach retirement age. This increase in risk may mean that they are less likely to lend to you or that they will offer you a higher rate due to the increased risk.

What options do we have?

Thee will be a difference between the attitudes of different lenders though. This means that it is well worth doing a comparison of many different mortgage companies to see whether there are some that are significantly cheaper than others. This is because they have different ways of deciding how risky a potential borrower is.

It is therefore wise to compare lenders. You can do this using a comparison website, but they will not include all lenders. You could use a mortgage broker but again they will be limited in the lenders they compare and they take commission, like the comparison sites, so may only include lenders that pay good commission. A financial advisor could be better if you pay to see an independent one as they do not earn commission and so will not be biased. You will have to pay but it could be well worth it if they find you a lender that will save you a significant amount of money. They also have a lot of knowledge about mortgages and the different types, which could be useful for you, especially if you do not know that much about them.

So it is worth looking around at your options even if you are near to retirement age. You age may limit how many lenders are prepared to give you a mortgage, but there will still be options out there and it is possible that you could still save a lot of money if you find the right lender. Therefore, taking some time to search what is available can be really rewarding as you could end up saving a lot of money which you could use to pay the mortgage off early or to spend on other things.