Car finance doesn’t have to be a minefield! It can be hard to navigate your way through all the different car finance options but with the top tips below, it can be straightforward! Before you jump into the first car finance deal you are offered, it’s worth exploring different options and remembering car finance isn’t guaranteed.
Your eligibility for car finance will depend on your personal circumstances and the lender you choose too. If you’re struggling to get approved by a finance lender, it can be a good idea to stop making applications and asking the lender on what basis you were refused, you can then tackle any issues before trying again.
1. Choose a shorter term.
Car finance is a flexible way of spreading the cost of a car into affordable monthly payments. You can choose to spread your finances over 3-5 years and it can be tempting to choose a longer loan term. By paying your car finance off over a 5-year period you are reducing the monthly payment.
However, you will usually end up paying more in interest. You should try to choose the lowest loan term possible with car finance monthly payments which are realistic and affordable.
2. Know your credit.
You would probably be surprised how many people apply for car finance without even knowing what their current credit score is. A lower credit score can make it harder to get accepted for finance and if you do get approved, you could be offered a higher interest rate.
The best finance rates are offered to high credit score applicants as they are usually less of a risk to lend to. However, the decision ultimately lies with the lender at the end of the day. To get ahead of the game, you should check your credit score regularly and make any improvements where needed before you apply for finance.
3. Say no to add-ons.
When you apply for car finance at a dealer or manufacturer, you may be offered some optional extras to increase the cost of your finance deal. These add-ons can be made to seem essential by the dealer but most of the time, you won’t need them.
Brand new cars may come with extra add-ons such as features, technology packs, and GAP insurance. It can be worth weighing up what optional extras are essential to you and what are not. The running costs of owning a car can be expensive and you don’t want to make your car choice the wrong one. By just saying yes to everything offered, your finance deal can become much more expensive than you first agreed.
4. Consider the finance first approach.
More drivers are choosing to sort their car finance first before even setting foot within the dealership. You can still benefit from cars on finance with no deposit and abradable monthly payments on the model you want but you secure the agreement that’s right for you first.
You can secure an online finance deal from a reputable car finance lender and choose monthly payments that suit your situation. Once it’s agreed, you can then choose a car within your budget from any participating dealership.
5. Read the fine print carefully.
Before you sign on the dotted line, you should always read the rules of your agreement carefully first. It’s important you understand the fees, interest rates, and any penalties associated with your deal.
If you’re not sure of any of the jargon used in your agreement or anything that doesn’t make sense, don’t be shy to ask questions and only sign the agreement once you’re completely comfortable with the deal you’re getting.