Auto purchases or repairs

What are car finance loans?

A car finance loan is an agreement between you and a lender to borrow the funds necessary for the purchase of a new vehicle. These agreements are paid back on a monthly basis with interest (installments).

How does it work?

There is more than one option. Firstly, there is a direct loan. This will be arranged with a lender directly by yourself. Secondly, there is an indirect loan which is arranged through the dealership. Thirdly, you may be able to lease the car. This involves paying a fee monthly and giving back the car after approximately 3 years.

What to consider (negative points/ risks)

  • You may be penalised for going over a set mileage per annum, or for extreme wear and tear, such as dents and scratches.
  • If you wish to purchase the car at the end of the lease, it could cost you more money than if you had bought it in the first place.
  • Interest rates can be higher on used cars over new cars.
  • Until any loan is paid in full, the lender holds the title to the car.


  • There may be lower interest rates for a new car than a used car.
  • A loan or lease saves having to find a lump sum in which to buy the vehicle outright.
  • A loan can ease the strain on your finances by budgeting a set, yet affordable, monthly amount to repay.
  • A loan will allow flexibility as you can decide how long you’d like to repay the loan and spreading it out.