Are you thinking of buying a new car? In that case, there is a high chance that you need help with the financing. In this post, I thought to share my best tips on how to get away as a private person as cheaply as possible when you want to finance your new car with a loan.
Car loan without collateral
The most common way to finance a car purchase is with a unsecured private loan, a so-called blank loan. Without security, you do not have to pledge any property and you can use the money for exactly what you want. With a car loan with no collateral , you can get the loan paid to your bank account before you decide which car you want to buy, so you can buy your new car in peace and quiet when the right opportunity turns up. This is a major reason why unsecured home loans are the most common way of financing a car purchase.
Lenders that offer private loans generally always use individual interest rates. This means that you must apply for a loan before you find out your personal interest rate, which is determined by your credit rating. Your credit rating is largely assessed on the basis of the credit information obtained by the lender from the Information Center (IC), which includes information on your declared income and any liabilities, among other things. With a good credit rating and a high income, you can expect an interest rate in the range of 3.5 – 5.5%.
With a private loan you usually have the opportunity to borrow between USD 10,000 – 600,000 with a repayment period between 1 – 15 years.
Car loan without IC
Loans without IC are becoming more common in the Swedish market, especially among lenders offering smaller loans up to approximately USD 30,000 – 60,000. Lenders offering loans without IC carry out their credit information through another credit reporting company, where two common alternatives are Lite Lender and Best Bank. These types of loans are perfect for those who want to borrow a smaller amount over a shorter repayment period than 12 months. Car loans without IC are therefore not a good option for those who want to borrow money longer than 12 months due to the high interest rate. The interest rate for loans without IC is usually in the range of 35.0 – 39.0% at the same time as both notification fees and setup fees are often added.
With a car loan without IC you usually have the opportunity to borrow USD 1,000 – 50,000 with a repayment period of 30 days.
Get the best interest rate through loan brokers
In recent years, more and more Swedes have started using a loan broker to get the best interest rate for private loans without collateral. With the background that the interest rate for private loans is set individually, as a private individual, you have to ask a number of different lenders to be sure that you get the best interest rate. However, a common problem is that a number of credit reports are also collected at IC. Too many credit reports at IC can lead to a deterioration in creditworthiness and too many credit reports over a continuous 12-month period can make it almost impossible to get a loan granted application at the same time as all lenders always share a single credit report with IC. You can thus be sure that you will receive the best interest rate on your car loan based on your financial circumstances.