Hold on to it: Don't fall behind on your loan payments.

SO you've found the perfect car. Hurrah! You know without even looking at the price tag however, that you're going to have to apply to the bank for a loan.

Panic need not set in.

According to the loan team at the Bank of NT Butterfield, the process is simple and, if it makes you feel better, you're not alone. The number of applicants seeking financial aid to purchase vehicles has increased in recent years, with many shopping in the second-hand market.

"The number of applications for car loans that we have seen in recent years has increased. It's mainly because there are some people selling their cars sooner so they can upgrade to a new car, but also because there are many more people who can afford to purchase cars because of the second-hand market,'' explained a member of the bank's loan team.

"A lack of credit history is an element (of consideration for us) but the ability to repay the loan and the fact that there be collateral are important factors too. We also look for employment and residence stability.'' Acco rding to the bank, there are certain factors, which if in place, are likely to assure that an applicant's loan will be approved.

* A person's ability to consistently meet the monthly payments.

* How the loan will affect their monthly expenditure.

* Generally, the Bank will do all it can to make sure every aspect of the transaction -- from the initial application approval until the loan is repaid -- runs smoothly.

"The Bank may confirm the value of the car with the insurance company and we sometimes suggest cheaper cars if the applicant cannot afford the car they are considering,'' explained the loan team.

"A second hand car should be repaid over a period of three years. At today's interest rate, payments would average $32.38 per thousand. The person's proposed budget during the time of the loan is important to us. We want the arrangement to be mutually advantageous.'' Once a line of credit has been established, there are certain common sense pointers to which borrowers should adhere.

* Don't move around. Creditors hate nomads. Don't apply unless you've lived in the same residence for at least six months.

* If you can, pay more than the minimum monthly payment. If you send in the minimum payment every month, it will take years to pay off your balance because interest is accruing on the remaining balance.

* Keep at least one creditor happy. If you develop bad credit, stop spending for six months, and concentrate on keeping at least one of your credit accounts in good standing.

* Don't change jobs frequently. Creditors like stability. If you've been at the same job for three years and lived in the same house for three years, they'll feel much better about having you as a customer.

* Have a verifiable address. The key to stability is living where you can afford the rent, even if it's not up to your standards, so you don't have to move. If you move around you become uncreditworthy.

According to Tammy Burrows, loan officer at Bermuda Home, it's when borrowers don't pay their bills -- or follow the above pointers -- that trouble sets in.

"We don't enjoy repossessing cars,'' she said. "But if we have no communication, if we have no response, that's when we can't work with them anymore.'' The main reason that cars are repossessed, explained Ms Burrows is due to non-payment, with approximately two or three cars collected every three months.

"There are various reasons why people can't (keep up with their payments),'' she said. "For a lot of people out there, their circumstances change -- they get laid off, they lose their job. Some just don't want to pay. "And there are some who haven't really had a major problem, their whole (financial) picture is fine, but they tend not to have their priorities in place. Maybe they'll go out and purchase something else (expensive) and decide it's more important to pay off that bill than the car loan.'' One missed payment will not mean that a car will certainly be repossessed, however one should not assume that it will not be noticed either. According to Ms. Burrows those who are genuinely interested in meeting car payments but have suffered an unexpected financial setback, should discuss the matter with their loan officer.

"The key is communication,'' she stressed. "We do give warnings and set a certain date by which they must pay for it and we do give a final letter and a time for payment but if a person is genuinely trying (to repay their loan) we will do what we can.'' However, once those resources fail, the process of repossession is a simple one.

"When we do repossess cars, they're stored at one of the dealers,'' she said.

"We then advertise in The Royal Gazette that a car is available for anyone to view and they then send a bid, in writing. We have a closing date and then we determine who's successful. The car is sold `as is'. Any funds raised (in excess of the amount due) are returned to the client.

"There are no repairs done to it, if any are necessary. It's up to the client, (to do that) once they've purchased it. We send the insurance company and (the Transport Control Department) instructions to let them know we that we have sold the car to a certain client, as the registration will change.''