Car finance is one of the main types of finance an individual will apply for during their lifetime. This is because cars are generally quite expensive and consumers loathe to spend all their savings on a single item. For many, they will also need to car to commute to and from work, university, and more. There are many different car finance options available on the market and consumers are recommended to shop around for the best deal. The right finance option will meet their needs and suit their budget. Lloyds Bank Car Finance is not really known for its variety, but it does seem to meet a number of needs. This review takes a closer look to determine whether a single product can rank at a perfect score.
Car finance is one of the top products offered by Standard Bank. Discover whether it was enough for a perfect score.
About Lloyds Bank
Hundreds of years of banking have led Lloyds Bank to become one of the biggest financial institutions in the world. The bank has a massive asset holding and has a steady stream of growth and acquisition to thank for it. It also has over two-hundred years in the industry with which to perfect its banking regime. As one of the banks that face the biggest compensation bills, all that history still doesn’t mean an institution is immune to bad conduct. It also didn’t meet the profit targets set for the last quarter, however, is still profitable. This after the financial crisis of 2008 means that banks are finally underway to start performing again.
A full review was recently done on Lloyds Bank, which offers a bit more background into this banking giant.
What You Should Know About Car Finance
Those who are in a position to save for their car are probably better off in the long term, and here is why.
Car Finance Usually Makes the Bank the Owner Until the Final Instalment
There are some banks who style their car loans as personal loans and do not take the vehicle as security for it. The rest do, and customers need to know the risks associated with this form of finance. One of these risks includes the bank’s right to repossess the vehicle in the case of non-payment.
It Affects Credit Score
Not only do payments of credit accounts affect the credit score, but the application itself as well. This is to ensure that customers don’t take out multiple loans at the same time. Only apply for the finance once all documents are in place and research is done. Some banks do offer a pre-screening to ensure affordability and eligibility that does not affect the credit score.
Interest is Expensive in the Long Term
This is an important factor to consider as many consumers are afraid to commit a chunk of their savings to a vehicle. The result is a higher installment and overall higher cost of finance as interest all adds up. A higher deposit means the customer pays less in interest over the term of the finance. A higher deposit means a reduced risk for the bank, which could allow the customer to negotiate their rate.
The Term of the Finance Plays a Big Role in Total Cost of Repayment
Although the term of the finance is often a straightforward 48-60 months, there are banks that offer finance for periods of up to 84 months for big-ticket items. The danger of prolonging the period is that the finance becomes more costly thanks to interest.
Not All Car Finance Options are the Same
Some finance types work the same as a personal loan where the bank doesn’t take ownership of the vehicle during the finance period. Other banks have different finance options where the customer has the choice to claim ownership or not at the end of the period.
Lloyds Bank Vehicle Finance Product Offerings
UK Car Finance Plus
This finance option allows customers access to the vehicle without the upfront costs. Once customers have decided on the vehicle of their choice, the bank pays the dealer directly.
- The loan type offers customers an idea of their interest rate before they apply for finance. This makes it easier to budget.
- Customers can use the online platform for their applications without hassle. Furthermore, they will receive a response within minutes.
- Also, this type of finance is exclusive to Lloyds current account customers. For this reasons, customers are not required to do a credit check for the finance.
- Finally, there are two different loan types for customers to choose from, the Fixed Car Finance and the Flex Car Finance.
Fixed Car Finance
The other term for this type of finance is hire purchase. It involves a simple repayment arrangement and there are no mileage restrictions. Furthermore, customers can’t sell the car until the finance is paid off.
- Customers enjoy fixed monthly payments that don’t have any nasty surprises with changes in market conditions.
- The car belongs to the customer after the final installment.
- Furthermore, customers have the choice to repay the car in one to five years.
Flex Car Finance
This type of finance is also known as a personal contract purchase. It allows customers to save on their monthly repayments. Furthermore, customers get to decide at the end whether they want to keep the car.
- Customers who wish to purchase the car at the end, merely pay a fixed lump sum.
- The loan term is from one to four years.
- Furthermore, customers are not charged penalty fees when they pay the finance off earlier.
- Also, customers can’t sell the car until the finance is paid off.
- Finally, customers agree on an annual mileage limit. Customers who exceed this limit will need to pay extra fees.
Customers who prefer to save up for their car purchases should consider the range offered by Lloyds Bank.
What We Like About Lloyds Bank Car Finance
Customers who like to keep things simple will find this a suitable option. It provides straightforward finance and still gives customers the option between two different loan types. This makes us a little more forgiving to the fact that the bank only offers a single product.
There is also the fact that customers know right from the start what they’re getting themselves into. The bank is also upfront regarding their interest rates which make it the ideal option for those who don’t like nasty surprises. It is also a good platform for the bank to be a little more competitive. This is because very few other banks are upfront with their rates online which makes Lloyds a little more attractive.
Furthermore, the choice between hire purchase and lease agreement make this a good option for those with different needs. The lease agreement has lower premiums and customers have the option to pay a lump sum at the end should they wish to keep the car. This finance type works especially well for those who may need to change their car every few years.
Finally, Lloyds customers have the sole benefit of having access to UK Car Finance Plus. This makes the product far more exclusive and will give Lloyds customers the edge. Current account customers are, therefore, rewarded for their loyalty.
What We Don’t Like About Lloyds Bank Car Finance
The very thing that we love about Lloyds car finance is also the thing we hate about it: the simplicity. Only one product makes it a little difficult for Lloyds customers to have a bit of diversity. There is no mention on the site whether the bank is willing to look at finance for other asset types such as two-wheelers, caravans or motorhomes, and boats. This could cause customers to look around for finance at a competitor.
Also, the fact that the finance is only available to Lloyds current account holders places it out of reach to future potential Lloyds customers. They won’t necessarily move over their primary account just for car finance. There is also the savings account holders at Lloyds who will not be able to benefit from the product purely due to the type of account they have.
Critical Reviews Rating Lloyds Bank Car Finance – 8 of 10
There are two reasons we are unable to provide the bank with the coveted perfect rating. The first is the fact that customers have a singular product to choose from. Even though it has two financing options, it still does not cater to all the diverse financial needs out there. Customers who wish to finance different asset types will not know off the bat whether they can approach Lloyds for it. This information should be available on the website.
The second reason we’ve had to subtract points is the lack of accessibility to the product. This is simply something that we couldn’t ignore as it curtails the bank’s opportunity to lure new customers. There is the possibility that clients would be willing to move over their account to apply for finance. The only problem is that there is the possibility they would need to build up an internal score first.
With so many years in business and such a high asset value, it’s surprising that the bank has chosen this route. Perhaps this is a way to mitigate their risk by reducing the chance of write-offs. Unfortunately, this approach is not customer friendly especially to those already on their books but do not have a current account.
Investments are also offered by the bank, which could assist in saving up for that down payment.