Halifax enters secured car loans arena

If you are thinking of purchasing a new (utilized) car, Halifax is supplying an on the web finance deal with interest prices from 3.6%.

The key point right here is that the finance is secured against the car, in the exact same way that a mortgage is secured against the property.

So if the borrower doesn’t preserve up the payments, the safety – in this case, the automobile – can be seized by the lender.

This means the borrower does not personal the car till the debt has been repaid. With a conventional unsecured private loan, the borrower owns the auto, and the lender has no claim on it.

Employing the car as security for the loan means the interest on the loan is charged at a reduce price.

It remains to be noticed no matter whether Halifax’s initiative will trigger related provides from other banks and creating societies, growing the choice obtainable to would-be auto buyers.

What’s the deal?

The new Halifax Vehicle Program Extra deal gives clients 2 auto finance choices. The Fixed Vehicle Strategy is a hire obtain agreement, or there’s the Flex Car Strategy, which is a individual contract obtain plan.

The Fixed Car Plan performs like a standard hire buy agreement, so the motorist pays for the car in fixed monthly instalments over a set period.

The consumer does not own the car till they have created the final payment, but they can spend off the finance early with no added fees or charges.

It is essential to keep in mind that the program is secured against the car, so if you do not keep up with the payments, the bank could seize the car.

Flexible alternative

Buyers with a Flex Auto Strategy also spend a fixed amount over a set term, but they enter into a private contract obtain agreement.

At the finish of the term, they can either pay off a lump sum to preserve the vehicle, or hand it back.

The monthly payments for personal contract obtain are reduce than for employ buy but there are typically restrictions on the use of the vehicle, such as annual mileage limits.

Once again, the customer can spend off the finance early with no further charges or charges, and the debt is secured against the automobile.

The interest rates on the plans commence from 3.6% on agreements in between £3,000 and £60,000.

Who’s it very good for?

The Halifax Vehicle Strategy Added is not an ordinary loan. As noted, you do not borrow money to purchase a auto outright, as with a personal loan – the finance in this case is secured against the auto.

Certainly, with a personal loan, there’s no obligation to devote the cash on a auto, or on something else.

But if you’re in the marketplace for a vehicle and are attracted by the affordability of a employ acquire plan or the flexibility of private contract obtain, the Halifax deals could be tempting.

Clients access the Halifax Vehicle Strategy Extra through the vehicle finance tab on the bank’s site and use the on the web calculator to view the various possibilities and payments.

They then total the application form online and funds is sent straight to the auto dealer.

Any catches?

The only men and women eligible for Halifax Automobile Plan Additional are Halifax web banking customers who have held a personal current account for a minimum of 3 months.

At the moment, the finance options are also only available for employed automobiles bought through dealerships. Nevertheless, the bank expects to roll out the plans to brand new automobiles in the coming months.  

What’s the verdict?

The Halifax Car Strategy Additional delivers 2 varieties of car finance program at comparatively low interest prices.

However, it’s crucial to comprehend the pros and cons of each hire purchase and individual contract buy agreements prior to you take up any supply.

It is also a very good notion to evaluate the expenses of the auto plans with similar arrangements from other lenders – and with a simple individual loan.

Prime tip

If you use Halifax Vehicle Plan Extra’s online calculator to view your finance options and payments, it won’t leave a credit footprint, so it will not impact your credit score.

Halifax enters secured car loans arena