Buying a new car with a £10,000 car loan

The average price of a new car is estimated at £28,325* - a lot of money to raise or borrow. Luckily, it's becoming easier than ever to find budget friendly options, with many models coming in as low as the £10,000 mark.

So, when it comes to financing your car, we're here to make it easy for you. With a £10,000 Ikano Bank loan from 3.5% APR Representative and the option to spread payments between 12 and 60 months, you can rest assured your new car will be a great drive, stylish and affordable.

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Car loan steering wheel
If you're in the market for a new or second hand car here are some ways you could pay for it

Why choose a loan to buy your car?

If you want to borrow money to buy your new car, there are a lot of ways to do this. From a dealer finance package such as hire purchase or leasing plans, to personal lending in the form of a loan or credit card.

A personal loan is now the most popular way to finance a new car. It's often the cheapest form of borrowing - but low interest rates aren't the only reason more and more people are turning to a loan to buy a car:

  • Easy to arrange: you can apply and sign for your personal loan online, receiving a decision instantly. If you’re successful, the money is in your bank account the next working day.
  • You choose the repayments: the longer you choose to repay your loan the higher the total cost of credit will be, but longer repayment terms can reduce the amount you pay each month, making the repayments more manageable.
  • You own the car in full: Unlike with most manufacturer finance deals, you own the car from when you leave the dealership, not just once you’ve paid off the loan. This gives you the option of selling the car if you no longer need a vehicle, or if you fall into financial difficulties.

    Remember - the longer the term of your loan, the more interest you’ll pay overall.

    Representative Example:- Loan amount: £10,000; Term: 48 months; Monthly repayments: £223.32; Total amount repayable: £10,719.36; Cost of credit: £719.36; Interest rate (fixed): 3.4%; Representative 3.5% APR.

    If you choose the same loan over 5 years, you’ll only repay £181.67 per month, but you’ll pay £900.20 in interest – spread over 5 years.

  • Cash is king: If you pay on a credit card or enter a hire purchase/personal contract plan with your manufacturer, you’re not treated as a cash buyer. If you opt for a personal loan, you’ll be paying with funds from your own bank account – meaning you can often negotiate a discount for cash.

Apply and get a quote

What can a £10,000 car loan buy you?

It might not seem like much for a brand-new car, but there are bargains to be had in this price bracket. If you’re thinking about taking out a £10,000 car loan and want to know what it might buy you, we’ve put together a few of our top picks.

For £10,000, you could reasonably expect to buy a city car – something perfect for running around town, short commutes and the occasional motorway trip.

Under £10,000

Hyundai i10

Hyundai I10

At a glance:  This second-generation Hyundai has been billed as the perfect city car - cheap to buy and run and easy to use. With five doors and a roomy boot as standard, this version has more efficient engines than the original and an upgraded interior and exterior.
Price: From £9,250

Volkwagen Up

VW Up

At a glance:  Another great city car at a low price, the VW Up is more fun to drive than the Hyundai i10 and boasts a more luxurious interior too. You have the option to go for a sleeker (and cheaper!) 3-door model, or opt for a 5-door version if you often carry more than one passenger.
Price: 
From £8,995 for a 3-door model or £9,395 for a 5-door model. 

Dacia Duster

Dacia Duster

At a glance:  If you want a lot more space for your budget, this SUV is a sturdy, practical family car at a low price-point. It might not offer much in the way of cutting edge technology – the most basic model doesn’t even have a radio – but this is how the Duster can offer so much space and a nice drive, at such a low price.
Price: From £9,495

If you've got a bit more to spend...

Ford B-MAX MPV

Ford BMax

At a glance: If you’re after a reasonably priced family car, upgrading from a hatchback to an MPV could be the answer. The Ford B-MAX is versatile, coming with sliding doors at the back for easy access – and if you’re able to pay a bit more than £15,000 you could even opt for the 7-seater people-carrier version. Either way, this range is modeled after the Ford Fiesta, making it more fun to drive than some other MPVs on the market.
Price: From £13,295

MINI 5-door hatchback

Mini Cooper

At a glance:  You might not think £15,000 can get you a new car with a bit of prestige, but the MINI hatchback comes in at just under and the 5-door model transforms this classic into a far more usable car. As with all MINIs, it’s fun to drive – with the only real drawback of the model being a small boot.
Price: From £14,495

Audi A1 hatchback

Audi A1

At a glance: Another prestigious car at a surprisingly low price, £15,000 could get you behind the wheel of a desirable Audi A1. Although for the price-point you’ll only get the 3-door model, you’ll still benefit from the A1’s sleek, classy design and efficient driving experience.
Price: From £14,530

(All prices found via AutoTrader, and were correct at the time of writing – March 2017)

If you're feeling inspired with our pick of the best, you could apply for one of our personal loans today and be car shopping tomorrow.

With a 10-minute online application, instant decision and the money in your bank account the next working day, it’s never been easier to finance your new car.

Our Representative APR is 3.5%. To find out how much you’d pay, we use your financial circumstances and credit score to provide a personalised quote - this is obligation free and won’t show up on your credit file. So if you choose not to progress with your application, there’s no harm done.

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Buying your new car: What you need to know

There are lots of things to consider when buying a new car. You might have your finances sorted, know how much you want to spend and have a vague idea of the kind of car you’re after, but it’s still not as simple as just going down to the dealership, choosing a model and driving home.

We’ve put together a few of the questions you need to ask yourself before you hand over any money.

  • How does the car hold its value?

    Ikano car loan icon

    A car can depreciate in value up to 40%* in its first year on the road, and while you'll never get back as much as you paid for it, some models hold their value far better than others.

    Before committing to a sale, do some research on how much used versions are going for - if they plummet in value and you're likely to sell in the next few years, it might be time for a rethink.

     

  • Do I really need any extras that are being offered?

    Car loan gear stick

    If you’re about to spend £5,000 or more on a used car, it’s important to make sure you’re not buying a dud! Firstly, make sure you do a full visual inspection of the vehicle in daylight and with good visibility –  you want to make sure you can see any faults.

    Check the bodywork for any cosmetic damage, rust and uneven gaps between panels (which could indicate a shoddy repair job). Look at the engine and electrics, too, and make sure there aren’t any oil or water leaks. If this isn’t your forte, take a friend or family member who knows what they’re doing – or if you’d prefer, you can pay for a professional once-over.

    If you’re happy with the condition of the car, take it out for a test drive. You should use this as an opportunity to ensure it brakes and accelerates correctly, and that the clutch and gearbox are in full working order. Listen out for any odd noises while you’re driving, as these could be a sign of a mechanical problem.

    If you’re happy with how it looks and how it runs, you might think it’s time to hand over the money - but don’t part with your cash just yet! Use the DVLA website to check the car’s identity and make sure it hasn’t been written off or stolen, and check if it’s really worth the asking price by comparing it to similar models available online.

  • How much will it cost to insure and run?

    Ikano Bank car loan gauge

    A car costs more than the price on the tag! Consider how much your car will cost to insure, tax and run, so you know you can truly afford it. There are a few rules of thumb to bear in mind here:

    • Smaller engines can be cheaper, as they don’t burn through fuel as quickly (but only if used for short trips as intended – if you’re often on the motorway, a big engine will be more economical)
    • Diesel is cheaper to buy, but diesel engines tend to be less economical, making petrol cars cheaper to run overall.
    • Check the car’s CO2 emissions: lower emissions mean lower car tax
    • Smaller cars are often cheaper to insure
  • Have I shopped around for the best price?

    Car loan paying for your car

    Although it’s crucial to see a car in person and test drive it, once you know exactly what you want, you can often find a better deal through an online car broker, with discounts of up to 20%. You specify the model you’re looking for and they will match you with a dealer who’s offering a discount - they’ll usually take a deposit and you’ll pay the remaining balance on the day your car is delivered.

How to apply for your car loan

Now that you’re ready to buy a new car, we’re here to help you pay for it. Applying for a loan with us is as simple as 1, 2, 3.

1. Get a quote.

We'll provide you with a personalised quote that takes into account your credit rating and current financial circumstances. It will show you upfront the rate of interest you would be offered if your application is accepted and how much your monthly repayments would be.

We do a 'soft' credit search to provide you with this quote, meaning your credit file isn't impacted.

Get my quote and apply now

2. Apply and sign online.

When you're happy with your quote, you can apply online in less than 10 minutes. You'll need your address details for the last two years, your current employer's name and address (and how long you've worked there), your income and how much you spend on rent/mortgage and any childcare/school fees.

Apply now

3. Receive your money.

There’s nothing left to do but sit back and think about what kind of car you want to buy. We’ll pop the funds into your bank account the next working day subject to approval and your repayments will start the following month.

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Who we lend to

As a responsible lender, we need to know we’re only lending to people who can afford to repay their loans. For our peace of mind and yours, we have a few criteria for who we’ll lend to.You need to:

  • Be a UK resident (excluding Isle of Man and Channel Islands) and over 18 years’ old
  • Earn at least £10,000 a year
  • Have a good credit history (no previous defaults, CCJs, Debt Relief Orders, IVAs or bankruptcies)
  • Hold a UK bank account in your own name, which accepts Direct Debits.

If all of these apply this doesn’t guarantee that your application will be accepted. We will need to do some additional credit and affordability checks.

Get your personal quote and apply

 

*sources: www.theaa.com and http://www.thisismoney.co.uk