Whether you’ve found yourself on the side of the road, dialling roadside assistance one time too many or have been eyeing up the beauties at your local car dealers’ new showroom, buying a new car is a big decision. No matter if it’s a new 242 or used vehicle, when it comes to financing this new purchase car loans can help bridge the finance gap and secure the vehicle you want.

Here’s a guide to car loans and everything you need to know:

What is a Car Loan?

In basic terms, a car loan is a personal loan used specifically to buy a car. It involves borrowing money from a financial lender and agreeing to repay it over time with interest. The car loan can be used to buy a brand-new car or second-hand vehicle depending on your needs.

Types of Car Loans

1. Variable car loan interest rate
   A variable interest rate means that the car loan interest rate can go up or down depending on the lender. This will influence your car loan repayments each month.
    
2. Fixed car loan interest rate
   A fixed interest rate means that the interest rate on your car loan is fixed for the term of the loan. This provides you with financial stability knowing the monthly repayment will be the same each month. Avant Money offer a fixed car loan interest rate. You can calculate Avant Money repayments via the car loan calculator.  
    
3. Refinance Car Loans
   Refinancing can be an option if interest rates have dropped, your credit score has improved, or you want to reduce your monthly payments. It involves taking a new loan to pay off the existing one, ideally under better terms.

How do car loans work

Once you have found the vehicle you wish to buy, if you need finance, you should take steps to secure a car loan. There are some important car loan terms you should be aware of before speaking to your bank or lender:

1. Principal: This is the amount of money you borrow.
2. Interest rate: This stands for the percentage of the principal charged by the lender for borrowing money.
3. Term: The length of time you have to repay the loan.
4. Monthly repayment: The amount you pay each month, which includes both principal and interest.
5. Deposit: The initial amount you pay upfront towards the purchase price of the car.

How car loans work at Avant Money is quite simple. Avant Money offer an easy-to-understand car loan product to those looking to buy their new vehicle. The principle amount you wish to borrow is offered at a fixed interest rate for the full term of your loan. The loan term is flexible depending on your needs with terms of between 12 to 84 months offered. The interest rate offered will vary depending on how much you wish to borrow with a lower interest rate offered on loans over 20k. As it’s a fixed rate car loan, your monthly repayment will stay the same for the duration of the loan with no early repayment fees.

You can borrow between 5k to 75k meaning if you so desire you can fund most of the purchase price through an Avant Money car loan.

How To Get a Car Loan to buy a car

1. Figure out your budget
   Consider how much you can afford to pay each month. Include not just the loan payment, but also insurance, fuel, maintenance, and other costs.
    
2. Selecting the right Car
   When considering your budget, you should know whether you want a new or used car. Then research the kind of models you are looking for that fall within your budget.
    
3. Source finance
   Once you know the car you want, you need to ensure you have the finance to fund the purchase. If you do not have the money available to buy the car in full, then a car loan may be the right choice for you. In this instance, review how much of a loan you might need. Avant Money offer car loans from 5k to 75k and have an online car loan eligibility checker.
    
4. Get pre-approved
   Getting pre-approved for a car loan gives you a better idea of what you can afford. It also allows you to close quicker on a sale once you find the car you want.
    
5. Car loan drawdown
   Once you’ve agreed on a car price with the seller, you’ll drawdown your car loan with the lender. This involves signing the loan agreement and supplying any required documentation.
    
6. Make Regular Payments:
   Pay your car loan as agreed on the terms and conditions of your loan each month.
    

Conclusion

Getting a car loan involves careful planning and research. By understanding the key terms, knowing how car loans work, and understanding the types of car loan available to you, you can secure a loan that fits your budget.

Avantcard DAC trading as Avant Money is regulated by the Central Bank of Ireland.