When you want to buy a new car, you will find yourself browsing a number of UK car dealerships and discussing the terms of a motor loan. The car dealers will throw out an incredible slew of information peppered with motor loan jargon, much of it quite confusing. It is a great idea to understand the jargon before you enter the first dealership. This enables you to fully understand what the dealer is saying about motor loans and safeguards you from being cheated out of your money by unscrupulous dealers.
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It is a good idea to do as much research as possible as the time you spend doing so will be well worth it. Try to understand the process as much as you can and do shop around. Shopping around not only gives you a good idea of current market trends but also a wide range of loan options. You may even find a better deal than the one you were initially considering. You are the one responsible for the full repayment of the loan so avoid any unpleasant surprises by learning as much about the process as possible.
This is a list of common motor loan terms and their explanation in simple English.
APR
Annual Percentage Rate. The yearly rate of interest calculated to include the fees and costs associated with motor loans. It gives you a regular rate for your loan rather than the one that fluctuates with the market.Adverse Credit
This description is used for people who have a poor history of credit use. This includes late payments on credit, defaulted loans, bankruptcy, mortgage arrears or county court judgments (CCJ). People who have adverse credit are at risk for being denied motor loans or approved for loans with significantly higher fees and interest rates.Consumer Credit Act (1974)
This UK law covers credit arrangements that include personal loans, credit cards and mortgages.Credit Reference Agency
The Consumer Credit Act issues licenses to credit reference agencies to collect and catalogue details on the credit histories of UK residents. This information enables lenders to access your information and determine your credit score.Credit Score
Credit score is the number given to you in a credit report issued by a credit reference agency. It helps lenders determine your potential for repaying loans (including motor loans) and the rate of interest you should be offered due to your credit risk level.Interest Rate
A percentage of the loan you take from a lender added to the total loan balance. It is the income for the lender for allowing you to borrow.Payment Protection Insurance
This insurance can be purchased along with your motor loan to make sure the loan is paid off even if you are unable to do so for fiscal or physical reasons.
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Total Charge for Credit (TCC)
The full amount you will have to pay for your vehicle. This number includes the motor loan, interest, fees, charges and insurance costs.Related Articles: