Car-Finance

What You Need To Know When Buying A Car On Finance

When you plan on buying a car, especially if the car is brand new, you will require quite a large amount of money. Unfortunately not many people are able to raise or even get hold of a huge amount of money all at once.

Hence the reason why car loans were invented in the first place. A car loan facilitates the purchase of a car. That said; there are plenty of car loans variations and distinguishing among the loans is a task that is too daunting.

Having said that; before you start going through every variation, let us take a look at some principles that you ought to be familiar with…

WHat You Need To Know Concerning Secured and Unsecured Car Loans

When it comes to banking and finance, we learn that in instances when a large amount of money is involved, attaining a loan from a lending institution such as a bank involves the submission or perhaps the offering of priced in form of collateral such a land title or a piece of extremely expensive jewellery.

The collateral is held in the custody of the lending institution as a pledge for the loan repayment. When it comes to car loans, the loan is obtained under the above mentioned circumstances which is known as “Secure Car Loan”.

This kind of a loan comes with a plethora of advantages other than being easily available and issued mostly by banking institutions. Several of the advantages include:

  • The ability of borrowing a huge amount of money
  • Interest rates that are relatively low
  • Flexible/negotiable monthly (small) instalments
  • Longer periods of repayment

Given the options above, any person applying for a loan is capable of managing the repayments. Unfortunately, everything that is good comes with its fair share of disadvantage and one huge disadvantage includes the risk of losing collateral should you fail to repay the loan in the agreed time frame.

You can also avoid any chances of losing your collateral by alternatively opting to take an unsecured car loan, this is a loan that you will not be needed to submit or offer collateral. But since lenders do not have any security when it comes to securing their money should you fail to pay the loan, you are penalized by the huge amounts in interest rates enforced on you.

A majority of car financing schemes including car dealership loans opt for unsecured loan option. Again a majority of car customers buying a car on loan also opt for this kind of a loan since they do not have any collateral to offer.

Sponsoring Bank

There are many other factors which come into effect such as the sponsoring bank participation that you have a credit record and one that is capable of procuring your credit records. Such a bank will in most instances be able to accord you the chance of covering the interest payments making it possible for you to enjoy a zero-interest payment scheme so long as you have a high credit rating or a great credit history.

The above mentioned are just but a few things you ought to put into consideration when considering a car loan…

 

insurance

Insurance underwriting laws in UK and Ireland

One of the most important factors to consider is the underwriting of the insurance policy. Insurance underwriting laws are almost always misunderstood. Having a clear understanding of the automotive insurance underwriting laws will also enable you to understand the policy better and make more informed decisions.

Insurance companies operates on a  risk concept- every time they get a new customer, they take inevitable risk. Underwriters evaluate the exposures and risk of their potential clients. From the analysis, the insurance company decides on how much the amount of coverage they will give to a certain client, how much they should pay for it as well as whether they should take the risk and insure them.

Underwriting involves analyzing and determining the premium that should be charged to cover that risk. It is very important because it protects insurance company’s from undue risks and ensures the company only issues policies at a premium that will commensurate with the risks presented.

There are many insurance companies in the UK and Ireland and each company has unique underwriting guidelines that help underwriters to determine whether or not the insurance company should accepts risk. But these guidelines are regulated by government bodies- for example, in the UK the Government regulates insurance policies. The law outlines that you should have an car insurance to drive on UK roads for instance .

There are many factors that are considered during insurance underwriting. Some of the factors include;

Age – statistics show that more accidents in UK and Ireland are caused by young drivers below 35 years of age. This results in young drivers being charged a premium due the additinal risk involved on the insurers behalf.

Credit score- credit score is also a very important factor considered in auto-insurance underwriting in UK and Ireland. People with decent credit score are known to be more careful- they avoid driving while drunk.

Age and driving experience- aged and experienced driver are known to wear seat belts and avoid over speeding. Many auto insurers are always ready to cover aged and experienced drivers at reduced rates.

Health- if you have hearing or sight problems, you are likely to be surcharged by insurance providers.

These are just some of the factors considered during insurance underwriting. The guidelines vary from one company to another. It is good to get cover from a company that uses objective factors to classify risk, consistent with UK or Ireland laws and directly related to the risk. Find car insurance deals in Belfast and Northern Ireland by local insurance brokers. Other motoring information you may find useful include Deal on cars, AutoTrader NI employees and the motoring insurance database askmid.