For many years we have seen the car finance market prosper. With low unemployment, positive financial futures and a general feeling of financial security, there were so many car loans available that virtually anyone could get car finance. Then along came the biggest economic downturn for many years, and the brakes have been well and truly applied to our economy and in particular lending markets.

What does this mean to the regular person on the street who wants to borrow money a new car? Well the main difference that has happened is that lenders have tightened their lending criteria. Due to economical uncertainty, job losses, and rising costs, lenders are more cautious with who they will lend money too. They feel the risk of loan repayment defaults have increased, so they are more careful when approving finance for cars, boats, trucks and other equipment.

A consequence of less loans in the market is that the amount of brokers who can get you a cheap car loan has now shrunk dramatically. This is particularly the case when the finance being applied for is a non standard loan. Bad credit loans, low doc or self employed loans, no deposit loans and other non conforming car loan options have become few and far between.

Many of the major lenders, such as banks and big finance companies, now restrict the amount of non conforming car loans they are willing to offer to the market and particular brokers each on a monthly basis. So many car finance brokers find it very difficult to exist in today’s environment. They simply cannot place a high enough volume of loans to make ends meet.

Less competition might sound bad for the consumer but it is does not have to be the case. It has become more important for people seeking car finance research and have their financial history well presented. Interest rates are no higher than before, as long as you can find the right broker to secure you the deal. It is still likely to be more expensive to go directly to a bank or lender directly.

One danger is to resort to disreputable lenders or ‘fantasy loans’ that claim to be offering 0% interest, or time periods that are interest free. Nobody lends money for free and so it is important to be aware of that from the beginning. Any loan mentioning such offers have a catch, that could be a very expensive one. It is better to stick to established respected lenders who can still offer a wide range of car finance options to suit your situation. One that can sum up your financial situation and future economic position to recommend the cheapest loan option available for the car you want to buy.

When deciding how much you can afford to borrow, there is more to be considered than just the interest rate. You need to allow for the the other necessary costs of registration, car insurance, any other required insurance, running costs, possible repairs, the potential of rising oil prices, and any account fees associated with the loan.

These costs should be included when calculating the amount of your monthly. This will help you to budget how much you can afford to borrow and also prepare you in advance with your day to day budgeting.

A good finance broker will have a wide variety of loans based on your economic position. The more lenders they can utilize or the bigger, better quality their borrowers are, the better chance you will get a good loan. Smaller brokers in the current finance market will unfortunately it increasingly more difficult to get a loan that is actually the right one for you, and may try to push a loan because it is one they still have the ability to sign.

One word sums up the current world economy… unpredictable. This means you should also be considering for a flexible loan, particularly when buying new cars. Check the conditions if you want to pay off your car loan early or refinance to a different loan.

Having a loan already approved for the amount you want to borrow also gives you more buying power when you go to buy your car. You will be aware of your limits and the seller will need to compromise to meet you demands if they wish to make the sale. It will also pressure you into using finance companies they are associated with, whose conditions you may not fully understand.

It is more vital than before to do your research when searching for a car loan. Stick to the trusted established brokers with strong lending history and avoid offers of free finance or convenient finance lots of hidden charges and conditions.

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