How a car loan works

Buying a new car can be exciting and expensive. With a personal loan, you can break the total cost of a car into smaller amounts to suit your budget. Buying a car with a personal loan means it will be yours from the moment you drive away..

You choose the loan amount and how long you want to borrow for. With fixed monthly payments you’ll always know where you stand.

The interest you pay on a personal loan could be lower than those offered by car dealers but you could also choose to buy a car from a private seller instead. A loan will give you that flexibility.

3.1% APR representative for loans of £7,500 to £15,000 over 1 to 5 years.

MBNA personal loans are provided exclusively by Lloyds Bank plc. MBNA Limited act as a credit broker and not the lender.

Here are a few things to think about before you buy your next car:

Work out your budget

Take a look at what money you have coming in, then look at how much your regular expenses are. This will help you see how much you could afford to pay back each month and whether a car loan is the best option for you.

Also check all your accounts. Do you have any money saved up that you could put towards buying a car? This could help you reduce how much you borrow and work out cheaper in the long run.

Do your homework

Once you know your budget, you can start looking for cars in your price range. Make sure you compare prices of similar cars so you don’t pay more than you need to.

It’s also a good idea to get insurance quotes and check car tax rates before you buy. Keep in mind the cost of any work that might be needed too.

Bring a buddy

When you go to see a car, try to go with someone who knows what to look out for. They’ll be able to spot any issues that you might have missed.

Make sure you view cars in daylight and always ask to test drive any car before you buy.

Apply for a car loan

As with any loan, when you apply there will need to be checks about your personal situation. These checks will affect the decision whether to offer you a loan. The loan amount and the interest rate you'll be offered will also be based on these checks.

How it works when you apply for an MBNA personal loan:

  • You can apply for between £1,000 and £25,000.
  • Choose to make your monthly repayments over 1 to 7 years.
  • It takes about 10 minutes to apply online and get a decision.
  • If you’re approved, you should have the money in your chosen account within 5 working days.

Representative example

You could borrow £10,000 over 48 months with 48 monthly repayments of £225.04. Total amount repayable will be £10,796.40. Representative 3.1% APR, annual interest rate (fixed) 3.06%.

The representative APR applies to loans of £7,500 to £15,000 over 1 to 5 years. Other terms and loan amounts are available at different rates. The maximum APR you could be offered is 29.9% APR.

The representative APR is the rate that at least 51% of people are expected to receive when taking out a loan within the stated amount and term range.

Apply now