You need a car but the cost of the purchase is something you’re worried about. Your take home pay seems to be diminishing yet everything in the shops seems to be on the rise. You wonder where it will all end and whether you’ll be able to afford a that car you’ve got your eyes on.
You’re not alone. Not many people are able to go out and buy a brand new car or a second hand car with cash. That’s where car finance can be so beneficial. Rather than having to raise the money up front or approach the bank for a loan it’s possible to buy a vehicle using car finance. In so doing it spreads the cost evenly over a set period and you can afford to buy a safe vehicle that’s worth the money. Everyone wants the best deal they can get, but how do you know a good deal or not.
Drive a Hard Bargain
The good news is that many car dealers rely on the sales of car finance deals to bump up their income. They can often earn more money from these extras compared with selling the car for a cash deal As well as being ‘sweet’ for the dealer, it’s a neat deal for the consumer too.
Ideally you will have a good credit rating as you’ll be offered the lowest interest rates, but it’s still possible to find deals even if your credit rating isn’t the best. You can sometimes get a much better deal if you let the dealer know you do have the choice of paying in cash, leaving them with some work to do to make the prospect of buying on finance more appealing. It’s a fantastic way to get the best price possible and end up getting the car you really want rather than having to make a compromise.
Know What the APR is
The annual percentage rate is the figure you should concentrate on when comparing the deals. You should aim to get the lowest APR possible but always ensure that you compare the deals that are for the same loan amount and over the same period of time. Often dealers skirt around the actual APR in a bid to make the car seem cheaper than it really is. Avoid this by asking them outright for the exact APR of the finance which includes the fees and the interest.
Look at the Long Term
You may find the monthly repayments are very attractive and affordable but it’s easy to forget how long you’ll be paying this amount and how much it actually adds up to. You may end up getting a very expensive deal without really realizing it unless you ask the dealer to give you the total cost of the car finance including all the fees, the interest and any other charges. Be sure to work out the cost and do your maths and that you understand exactly how much is being added on top to cover the interest rate.
Buying New or Second Hand
These days you can find great deals even if you’re buying used cars rather than new ones. It makes more financial sense to buy a second hand car as you don’t need to worry about the depreciation of the vehicle. Merely driving a new car off the forecourt can reduce the value by as much as a third of the price of new.
Just make sure you buy from a reputable dealer, one who is able to offer you some form of warranty and provide you with a sensible finance deal on top.
Image attributed to: freedigitalphotos.net Keattikorn
Category: Car Purchase