Can You Save Money on Car Finance?

When it comes to vehicle finance, nobody wants to pay more than they have to. But can you really save that much money when purchasing a car? You may be able to cut back costs significantly – depending on things like the type of car you purchase, how large a deposit you make, and if you’re willing to negotiate on price! We’ve looked at six different ways you can potentially save money on your car finance below:

1. Consider the Vehicle Specs

When buying a new car, it can be tempting to get the newest model on the market, that comes with the latest bells and whistles. But even if you can afford to do this, you should also consider how much a top-of-the-line vehicle will cost in terms of your interest rate and insurance premium.

Make sure you look at things like the engine size, whether the car is petrol or diesel, as well as manual or automatic, and if the vehicle is a hybrid or automatic. Checking the car’s CO2 emissions can also be sensible, as the lower these are, the lower things like road tax will be. The cost of a car isn’t just about the purchase price!

2. Make a Bigger Deposit

If you’ve taken out a mortgage, you’ll know that the higher the deposit you’re able to put down, the more of the property you’ll own at the start of the agreement. This therefore means that you’ll be paying back less interest overall. The same is true of purchasing a vehicle – if you’re able to pay a bigger deposit, the lower your monthly payments will be.

Some dealers will offer the option of buying a car with no deposit, and this can sound like a good idea, especially if you haven’t saved enough money to put down an initial payment. However, it will mean you’ll pay more in total, and are likely to have higher monthly instalments.

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3. Part Exchange Your Old Vehicle

If you’re looking to reduce the price of your new vehicle, it can be sensible to part exchange your old one. Alternatively, you can sell to a private buyer – you may be able to get more money by doing this, though it’s usually a lot more hassle. Either way, make sure that the car is in the best condition possible, by cleaning the interior and exterior, as well as fixing any small dents or scratches.

Another thing you may wish to think about is whether you need a brand new car – any vehicle that has been used in a showroom or for test driving is essentially new, but will be cheaper as it’s not straight from the manufacturer. Pre-reg cars can come with a huge discount too, as they have technically had a previous owner (the dealership).

4. Try to Negotiate the Price

When you buy at a dealership, it’s generally expected that you’ll haggle on the price. Some people don’t do this, and simply pay the asking price, but it’s usually worth trying to at least see if you’re able to negotiate any extras, even if the cost can’t be lowered. Speak to various members of staff at the dealership, to see if any of them are willing to offer a better deal, and don’t be afraid to walk away if you think the asking price is too high.

Another good technique when negotiating price is to bring in offers from competitor dealers, as well as any deals you’ve found online. If you can demonstrate that the average price of the make and model you want is lower than what the dealership is offering, they may be willing to match other offers. And if not, simply approach the competition and buy from them!

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5. Improve Your Credit Score

You may be aware that, typically, if you have a higher credit rating, you’ll be offered better interest rates. This is due to the fact that you’ll be considered a lower risk to the lender – you’ll have proven with previous credit that you’re able to repay on time. Your income and overall affordability will also play a part in the interest rates you’re offered, but you can’t do a lot to improve these things.

Your credit score, on the other hand, can often be boosted in both the short and long term. So if you have a bad credit history, in the short term you can cancel any credit cards you no longer use, and settle any small, older debts. Longer term, you can look to pay off larger debts, or even look into consolidating them. It’s also helpful to regularly check your credit score, to see how quickly you’re improving it. You can do so for free via companies like Experian and Credit Karma.

6. Compare Prices

Don’t just buy the first car you see! As mentioned above, you should do some research into makes and models before deciding on anything, and once you’ve decided on these things, it’s a good idea to shop around. Use comparison sites and look at a range of online retailers prior to signing any agreements.

It’s also important to try and buy a vehicle at the right time. Just like most areas of retail, seasonality can play a part in purchasing a car. It’s encouraged that you avoid buying a vehicle during the busier parts of the year, such as the peak of summer. Try to look for a new set of wheels in winter, when dealers are more open to negotiating on the price – less cars are sold in the colder months, so they’ll be looking to make a sale.

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