An unsecured car loan is a personal loan offered solely for the purchase of a vehicle. The loan will usually come with additional benefits such as discounted vehicle inspections, car parts, breakdown cover, etc.
Unsecured personal loans – and therefore car loans – are usually covered by the terms of the Consumer Credit Act
An unsecured car loan works in much the same way as a traditional personal loan: a lump sum is lent in return for you agreeing to make regular repayments, usually by Direct Debit. It's repayable over a specified period of time, usually between six months and 10 years (although loans for car finance tend to be over a shorter term, typically three years). Security will usually be needed for loans of a large amount.
Lenders charge interest on the amount borrowed. The interest rate is usually fixed at the start of the loan, which means that the repayments remain the same throughout the term.
The interest charge is shown as an APR (Annual Percentage Rate). Any firm that lends money is required by law to quote the APR, and to offer this advertised rate to 51% of borrowers. The APR usually depends on the amount of the loan and sometimes the term as well, although some lenders do offer the same rate to all their borrowers.
It's important to check the best rate dependent on the amount and term you are after.
Read our guides on personal loans for a more in-depth overview of the things you need to consider when taking out an unsecured card loan, including:
It is important to check the small print to ensure the cover provided is suitable for your needs.
Compare personal loans with our easy to use loan calculator
Check out our guide to personal loans for more in-depth information
Unit-linked pension contributions are used to buy units in a pooled fund (or funds).
Unit-linked pensions are invested in a variety of funds. The funds are grouped together in sectors, representing the style, area and risk level in which the relevant pension fund has chosen to invest.
As the value of the units may fall and rise during the period of investment, care is taken to 'spread' the investment in a variety of ways to obtain the best return commensurate with prudent investing.
Most companies will allow for the switching of funds at any time during the life of the investment. This becomes more relevant as retirement approaches and the riskier funds are often seen as less attractive than the more cautious funds.
Towards the end of the period the unit-linked fund is usually moved to a fixed investment where the increases are lower but guaranteed.
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Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.
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