Frederick Jace
If you don’t have the money to buy yourself a new or used car upfront, you may have considered other options. One of these options is to ask your dealership for a car financing option. This is a fantastic way of funding a car purchase, but you have to be savvy. Here are some tips to help you save money on car financing.
Part Exchange
In many of the larger dealerships such as those based in the city, cars can be part exchanged. This means that you give the dealer your old car and they offset the money it is worth against your new car. For example, if your old car is worth £5,000 and you want to buy a car for £10,000 you would only need to pay the £5,000 difference between car values plus give them your old car. This can be handy if you don’t want to go through the hassle of selling your car yourself and as you are borrowing less, your car financing will be cheaper. Check out these deals on Peterborough cars for an idea of what you could be paying.
Understand the APR
It may be that you have seen the headline rate on a car financing option. This looks low but it isn’t necessarily the APR that you are going to be offered. Your APR will depend on your credit score among other things, and you may not be eligible for the best rate. It is prudent to know how much you can afford and what APR you will be offered before you set your sights on a car. That way you won’t be disappointed if you realise it is out of your reach.
Borrow as Little as You Can
The more you borrow, the more interest you will pay on your car finance. Therefore, the bigger deposit you can find, the better. Even if you can only put down an extra couple of hundred pounds, it will still make a difference to the amount of interest you will pay.
Borrow for the Shortest Time Possible
The shorter the time you have finance for, the cheaper it will be. This is because you are not paying interest for a long time, so it doesn’t mount up easily. Once you have been offered an interest rate for your finance and you know how much you want to spend on your repayments every month then you should stick to this figure. You will have a lower monthly payment if you take the finance over longer and this can be an attractive proposition, but you will also pay a lot more interest on it. It could cost you several thousand pounds over the term of the loan even though the monthly payments are lower.
Use these four savvy tips to help you to save money when you are buying a car on finance. You should keep up your payments once you have signed the contract because if you are unable to repay your finance, the car could be repossessed by the finance company.
