Getting a car on finance can seem like a scary prospect if you’ve chosen the wrong agreement in the past or you’ve never taken out car finance before. Not taking your time to research or jumping at the first car finance deal you’re offered can cost you money and not be suited to your circumstances. There are a number of ways in which you can help to get the best car finance deal possible for your circumstances, from improving your low credit score to saving up for a car finance deposit, there are a few factors which can make car finance more cost effective. The guide below has been designed to help you get the car finance deal that’s right for you.
Shop around
One of the biggest mistakes made when finding a good car finance deal is jumping at the first finance approval you are offered. Granted, there are many car finance providers to choose from and it can harm your credit score to make multiple hard searches with different companies. However, it’s worth taking the time to compare different lenders by sticking to soft search applications or using a car finance eligibility checker first. You can also use an online company to find the best car finance Manchester, or somewhere more relevant to you, has to offer. These specialists will work on your behalf to compare a wide range of lenders and different finance options. This will help you find the cheapest car finance package for your circumstances.
Consider new and used cars
When car finance first came to the market, it was only really beneficial for brand-new cars. However, you can now finance both new and used cars through numerous types of car financing. If you want to keep costs low, you could consider financing a used car as the loan amount will always be smaller than brand-new cars. Alternatively, agreements such as PCP allow you to benefit from lower monthly payments, even on new cars due to their structure. Instead of paying off the value of the car over the loan period you pay off the rate of depreciation which makes the loan significantly smaller and adds on a balloon payment to pay at the end. You can also look into invoice price here, another route to purchase a new or used vehicle.
Be realistic
When you apply for car finance, lenders will look at your affordability and your ability to meet repayments. Your car finance budget should be realistic and manageable as it can lead to serious financial consequences if you fail to repay. That doesn’t mean you have to compromise on your dream car though. If you want to get the Audi of your dreams, Audi finance can help you spread the cost into affordable monthly payments.
Have a deposit
In car finance agreements such as Hire Purchase you may be required to out down a deposit at the beginning of your deal. If you don’t need a deposit, it can actually be beneficial to have one though. Putting more down at the start of your car finance agreement can reduce your loan amount, make your monthly payments smaller and make it more manageable.
Choose a shorter term
When calculating car finance deals, you may notice that a longer loan term reduces your monthly payments as it spreads the cost further. However, taking longer to pay off your car finance agreement can increase your interest rate offered and also means you end up paying more in interest over time. A more cost-effective option would be to choose the lowest monthly payments for your budget but with a shortest loan term possible.
Refinance your current loan
If you already have a car on finance and are looking for a way to get a better deal. You could look to refinance your car payments with another lender. Refinancing is when you replace your current loan with a new loan, usually with better terms. If you’ve used your car finance agreement to help better your credit score you may be able to get a lower finance rate and help save you money on your monthly repayments.
Increase your credit score
Most lenders will require you to pass a credit check when you apply online. They do this to see how you’ve handled credit in the past and where your credit score is at. If you’ve missed payments in the past or have high levels of debt, lenders could be worried that you can’t pay back your loan and make you more of a risk to lend to. Before you start applying for finance, you could consider improving your credit score first to help increase acceptance rates and also get a better interest rate offered.
