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GOOD CAR DEALS AVAILABLE FOR THOSE WHO SHOP AROUND
With new car registrations out this month, you may be thinking of trading in your old car and buying something brand new. And if you drive an old banger you may even be thinking of taking advantage of the government’s car scrappage scheme.
But with the credit crunch biting into many people’s finances, you’ll want to make sure you get the best deal possible to finance your purchase. So it is important to shop around, not just for a car, but for the best way to finance it.
Nationwide Building Society currently has the lowest personal loan rate on the market. If you have a Nationwide FlexAccount* you could benefit from the Society’s market leading rate of 7.7% APR typical on loans of between £5,000 and £14,999*. This typical rate beats the supermarkets and all the high street banks** – the same low rate applies whether the loan is taken out through a branch, over the telephone or via the internet.
If you need to borrow money to buy your new car, a personal loan could be the cheapest option. The finance packages offered by dealers may look appealing, especially if there is a 0% deal. But make sure you know what you are letting yourself in for. A special offer of 0% finance for the first year that then moves onto a higher rate for the rest of the term of the loan may well prove more expensive in the long run.
However you finance your car, make sure you know what your monthly payments will be and what the total amount payable will be over the term of the loan. And most important of all, make sure you are not borrowing more than you can afford.
Chris Rhodes, group product and marketing director, said: “Whether you are buying a brand new Audi TT or a second hand Renault Megane you’ll want to get a good deal on the car, and a good deal on the loan you take out to pay for it. So it pays to shop around not just in the showrooms, but also to find the best personal loan rates. I’m delighted that for Nationwide current account customers we’ve taken the pain out of shopping around, by making sure we offer them the best deal around. This is just the first of many offers we’ll be providing to Nationwide current account customers over the coming months.”
To consider what you can afford, and compare personal loans from key high street financial organisations, look at the table below.
Car Price Loan amount
Monthly payments for a five year loan based on typical rate
Total amount payable over 5 years
Total Savings with Nationwide
Nationwide Abbey Halifax Nationwide Abbey Halifax Abbey Halifax
Honda Civic £14,000 £14,000 £280.14 £287.61 £292.06 £16,808.40 £17,256.60 £17,523.61 £448.20 £715.21
Fiat Punto £8,000 £8,000 £160.08 £164.35 £166.89 £9,604.80 £9,861.00 £10,013.49 £256.20 £408.69
Second Hand Renault Megane £5,000 £5,000 £100.05 £102.72 £125.42 £6,003.00 £6,163.20 £7,525.04 £160.20 £1,522.04
To see how Nationwide’s rates compare with other lenders, see the table below.
Lender Advertised headline rate on £5,000 Advertised headline rate on £7,500 Advertised headline rate on £10,000
Nationwide 7.70% 7.70% 7.70%
RBS 12.90% 11.40% 11.40%
NatWest**** 12.90% 12.90% 11.40%
A&L 8.90% 7.90% 7.90%
Abbey*** 8.90% 8.90% 8.90%
HBOS*** 17.40% 8.90% 8.90%
Lloyds TSB 13.90% 11.30% 11.30%
Barclays 14.90% 9.90% 9.90%
HSBC*** 16.90% 8.70% 8.70%
Sainsbury’s Finance*** 13.70% 7.90% 7.90%
Tesco***** N/A 7.90% 7.90%
Mortgage Refinancing and Loans
Refinancing a first and second mortgage requires some extra considerations. Depending on your equity, you may find that combining the two mortgages results in a higher interest rate. You may also find that you have to carry PMI with the refinanced mortgage.
Will Refinancing Benefit You?
Refinancing two mortgages allows you to consolidate your loans into one payment, often lowering your monthly bill. You may also find lower rates under the right circumstances.
Those with a large amount of equity benefit most from consolidating loans since they qualify for the lowest rates. It is important to look at interest savings, not just monthly numbers which can be misleading.
However, if you have less than 25% equity, you may end up qualifying for higher rates. With less than 20% equity, you will also have to pay for private mortgage insurance. Even with these factors, you may still find that you will save money by refinancing.
Have You Done Your Research?
To see if refinancing makes sense for you, research mortgage lenders. You can quickly go online and request quotes and terms. Look at the different offers, and work out the numbers. An online mortgage calculator can help you figure out monthly payments and interest costs.
An easy way to compare cost is to first add up your interest payments for both mortgages. Use this number to compare interest payments with each potential mortgage.
You also need to factor in the cost of refinancing. Just like with your original mortgage, you will have to pay fees and points. You want to be sure that you can recoup these costs with your interest savings.
Why Do You Want To Refinance Both Mortgages?
While refinancing both mortgages is convenient, you may decide to refinance only one or both separately. With your main mortgage, you can expect to get low rates.
A second mortgage will usually qualify for higher rates, but you can lock them in. You may also choose to convert from a line of credit to an actual mortgage. Again, you will want to investigate financial packages before signing up with a lender.
About the author:
View our recommended mortgage Refi lenders. Carrie Reeder is the owner of ABC Loan Guide, an informational website about various types of loans.
Written by: Carrie Reeder
