Today when owing a car has turned into a necessity from luxury, one can't wait for years to save money and then buy a car. Car loans help people getting a car of their choice and need. With the car loan market in UK getting bigger by the day, the borrower can get a car loan at attractive rates. There are lucrative deals on new car loans and used car loans in the UK market.

Car loans can be secured, as well as unsecured, the latter being more popular. Let’s have a look at both the options:

Unsecured car loans- The borrower needs to have an excellent credit profile for procuring an unsecured car loan since it requires no collateral to support. Different banks and lenders have varied interest rates for this loan type. Unsecured car loans do not risk your assets, so is preferred by the borrowers.

People who already have a mortgage running on their home, car or property go in unsecured car loans. Elimination of valuation of asset and legal issues concerning it quicken the process. The APR on unsecured car loans is usually higher than their secured counterpart. Though the loan amount depends on the brand of car you have chosen, it also depends upon the credit history of the borrower. The current APR that lenders in UK market are offering is ranged in between 6.4% to 14.9% (fixed).

The following are the agreements that come under unsecured car loans:

Hire purchase (HP) car loans- Under this agreement, the lender doesn't get the ownership rights of the car unless the total loan is paid off.

Personal contract purchase (PCP)- As per this agreement, a proportion of the repayment amount is deferred to the end of the agreement so as to reduce the monthly payments.

Secured Car loans- They demand an asset to be placed as collateral for availing the loan. Being backed up a security in the form of house, they carry a comparatively low rate of interest. Since they involve a great risk in the form of house getting seized by the lender, this loan type is not that popular.

Car loans are basically the best way to get a car since borrowers may not have liquid cash to spend. But it requires a detailed comparative research of various deals on car loans available in the UK loan market.