Before you enter any agreements, know exactly what it is that you need. Shop around to compare the deals - and especially the interest rates charged - by building societies, banks, independent finance brokers and dealer's own schemes.
Always compare like with like — if you need to borrow £2,000 and would like to repay the loan over three years, ask each lender for details of the APR (Annual Percentage Rate) on a loan of this amount, the size of the monthly repayment over 36 months, and the total amount repayable.
Don't forget to check if the interest rate is fixed or variable.
Bear in mind that with some schemes you're not buying the car but renting it on a long-term basis!
Decide how much you can afford to pay per month. Paying off a loan adds to your running costs, so try to repay it as quickly as possible — total interest charges are lower for short-term loans.
Borrow only what you can afford to repay, and always try to put as much of your own money as possible towards buying the car.
Clued-up on credit
Put down the biggest deposit that you can afford
Work out how much you need to borrow
Check out terms from different lenders
Compare like with like loan amount and term
Always check the APR (annual per cent interest rate)
Secured loans are cheaper than unsecured loans
Apply to see your credit record if a loan is refused
Contact the lender if you can't keep up repayments
Consider a payment protection scheme
Get fully comprehensive insurance cover for the car
Next - Borrowing options
