When buying a new car, many people take out the finance deal offered at their dealer. They don’t usually research low rate car finance that could be available elsewhere.
Unless you have bad credit and you need car finance with bad credit you can shop around for the best rates.
Don’t let the salesman push you into a corner and make you sign a credit agreement you haven’t looked over. Instead, do your research and see what low finance car deals are available.
How to choose the right car finance option:
Hire Purchase vs Personal Contract Purchase
Both of these finance options are similar. They both require a deposit, plus regular monthly payments. The vital difference, however, is that at the end of hire purchase, you own the car.
Although this is possible with PCP too, you pay the depreciated cost rather than the car’s original value.
You then have the option of owning the car by making a final payment or handing it back to the dealership.
Personal Loan vs Credit Card
It’s also possible to pay for your new car using either a bank loan or credit card. Loans are particularly useful if you intend on selling your vehicle in the future. If you’re looking for a more affordable car, a credit card is an excellent choice for payment.
However, only do this if you’re 100% comfortable in making the regular monthly payments. Missed payments can sting you with unwanted interest.
Ways to Get the Best Interest Rate Possible
We believe that getting the best car finance rate possible for your car finance deal is a careful combination of thorough research and making the right choices.
Here are the main things you need to think about when finding the best car loan deals or low-interest car loans:
Type of loan
Interest rates and monthly payments can vary significantly between PCP and HP. So, make sure to think carefully about whether you intend to keep your car at the end of your finance deal. If you’re unsure, your dealership can advise you further.
Amount of deposit
Our advice here is simple: Put down as much deposit as you can. A larger deposit means your monthly payments will be much lower. Subsequently, this will help you secure the best car finance rates possible.
Interest and APR
Be sure to use a car loan comparison site to find low-interest car finance. You will notice dramatic differences in car finance APR and car loan interest rate. However, there are other fees to take into consideration too.
These include late and early repayment fees, arrangement fees, option to purchase fees and balloon payments. Be sure to take these costs seriously. Many don’t consider them until their contract ends, and are left with unwanted bills.
Personal credit history. Simply applying to all car finance providers is a big mistake. Instead, only apply if you think it’s likely that they’ll accept you.
Rejected applications can be damaging to your personal credit score. In contrast, if your credit score is healthy, your monthly payments could be lower. Which means the interest you’ll have to fork out will also be reduced.