Car FinanceCars

Making Car Finance As Affordable As Possible

Family Buying Red Car

As one of the most expensive purchases in life, you’ll always want to get the most affordable deal out there when buying a car – but how exactly do you do that?

There are actually a few ways in which you can bring your motoring costs down when acquiring a new one on finance (and a couple work even if you’re buying outright).

Have a good credit rating

It’s probably no surprise that the vast majority of car buyers are purchasing their vehicles through some sort of finance product (and there are a few now).

For each type, be it Personal Contract Purchase, Hire Purchase or a straight-out motor loan, having a strong credit rating is imperative to getting the lowest rate of interest.

As a result, the total cost of the car is reduced, though more importantly, your monthly payments are also much more affordable.

For some, getting a good credit score is a tough ask. There are several signs of having bad credit, but for the most part, these can be recovered from with some diligent work and discipline, leaving you not only with preferable interest rates, but also a better chance of being accepted for credit altogether.

0% Finance

Buying a car

As a side note to the above, many car buyers are attracted by the prospect of 0% car finance, and this is completely understandable.

What 0% finance allows you to do is escape the additional costs of credit against the cash price of a car, potentially saving you £1,000s on your finance deal.

However, there are a couple of factors to be aware of: firstly, the best of credit scores will typically be required if you want to be accepted for such a deal; secondly, a sizeable deposit is usually required to secure a 0% finance deal – both factors in place to help reduce risk for the finance company when you’re paying no interest.

Part Exchange

Existing car owners potentially already have an important asset to help bring down the cost of acquiring a new vehicle – their existing car.

While many will be aware of part exchange, which is a fairly simple method of saving money against a car, it’s so important, we couldn’t make this list without mentioning it. For some, their current car could be worth nearly five figures (or even over), and can be used as a huge deposit towards your next purchase.

That’s not to say you can’t put additional cash down on top of your part exchange, either, making for a very effective deposit when bringing the two together.

Manufacturer/Dealer deposit contributions

Women Buying A Car

Another factor that could help you on your way to reducing total costs, and your monthly payment, is contributions from the manufacturer, dealer or, if you’re lucky, both.

Typically only available on New Car deals, deposit contributions are incredibly useful to those unable to offer a decent part exchange or cash deposit, or anything at all.

If you’re in the market for a Used Car, then you may struggle to get such a contribution. However, some dealers might do something along the lines of a ‘minimum part exchange’, which will help give you a minimum value on your trade vehicle, effectively doing the same job of a contribution.

Bonus tip: End of the month

OK, so this is a bit of a cheeky one, and this may have been brought to the attention of a few people now, but dealerships and their staff have targets to meet, usually based around a calendar month.

Therefore, you could visit a dealership at the end of a month, hoping they could do with making up their numbers with some quick deals. These deals can be a bit more flexible in terms of costs/payments and benefit you financially.

About author

Poppy loves personal finance almost as much as she loves her two cats, Tif and Taz.
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