Buying a new car usually means having to consider some sort of finance package. If so check out all the options available to you.

Weigh up the pros and cons of each type of loan as you could end up paying a lot of interest on the loan. Bear the following points in mind before applying for a car loan .

• Consider all options – as there are many financing options to choose from make sure you take your time to find the best one for you.

• Secured or unsecured loans – if you do not wish to put your home at any risk or if you have no property to use as security, secured loans are not for you. However secured loans can allow you borrow at a lower rate . Unsecured loans generally have low interest rates usually between six to nine per cent and the monthly repayments are manageable. However to get an unsecured loan you need to have a good credit rating to get the best deal.

• Fixed or variable rate loans – there are advantage and disadvantages associated with both of these. With variable rates there is always the chance that it will go up as well as go down. Whereas, fixed loans allow you to manage your loan with a bit more ease.

• Balloon payments – this is a large lump sum payment that is made at the end of the loan period. These types of loans are not secured on property so your house is safe and the initial deposit required is also low.

• Approaching car finance companies – there is no shortage of companies who offer loans especially to those with poor credit ratings. These types of companies are good for people who need to buy a car and are refused loans elsewhere. However the down side is that the interest rates can be quite high.

There are many different types of loans on the market these days. Weigh your options carefully and hopefully you won’t be paying over the odds on your car loan .