Why your loan rate may differ from the advertised rate

Advertised rates are often 'from' rates

Headline rates are usually the lowest a lender offers, available to applicants who fit its best profile. Many borrowers will be offered a different rate once the lender has looked at their circumstances. Look at the comparison rate as well, because it includes most fees and charges and gives a better picture of cost.

Your credit history

Your credit report shows how you've managed credit in the past. A history of on-time repayments generally works in your favour, while defaults, missed payments or a lot of recent applications can lead to a higher rate or a decline. You can check your report for free and correct any errors before applying.

Secured or unsecured

A secured loan, where the car or asset is the lender's security, generally attracts a lower rate than an unsecured loan, because the lender has something to fall back on. That's one reason a car loan secured by the vehicle is often priced differently from a personal loan.

The asset itself

For secured loans, the vehicle matters. Its age, type and value affect how the lender views the security. Newer vehicles are often viewed more favourably than older ones, and some lenders have limits on vehicle age or particular types of seller.

How much you borrow, and for how long

The loan amount, the term and any deposit all feed into the lender's view of risk. A deposit or trade-in reduces how much you're borrowing compared with the car's value, which can help. Some lenders price different terms differently, so it's worth asking how the term affects the rate as well as the repayment.

Your income and stability

Lenders look at how stable your income and employment are, and whether the repayments fit comfortably within your budget after your other commitments.

The lender you choose

Banks, non-bank lenders and specialist lenders each have their own funding costs, appetite and pricing, so the same application can attract different rates from different lenders. The broader rate environment matters too, which we cover in our explainer on what moves interest rates.

General information only

This article is general information only. It does not take your personal circumstances into account and is not personal credit, legal, tax or financial advice. Rates depend on the lender and your circumstances, and all finance is subject to lender assessment and approval.

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