Car Finance Tips

Today (1st September) has seen the introduction of the new “58” car registration plates – a rather meaningless event nowadays, given the state of the new car market.

For those planning to buy a new car, how should you pay for it?

Research suggests that around 50% buy new cars using the finance deal offered by the car dealer: big mistake! The average interest rate on dealer’s car finance is nearly 3% higher than the cheapest unsecured personal loan currently on the market (7.4%, available through ASDA) – so although you may think the dealers would be giving you a good deal, this is usually the way they make a decent amount of money on the car. Here are a few more tips for paying for your new car:

  • Don’t take the finance deal offered by the car dealer – we’ve explained this above.
  • Find out what others are payingWhat Car? and the like should be able to give you an iea of the average price people are paying for your chosen make/model.
  • Shop around for finance – check out the best buy tables and comparison sites. Consider loans, credit cards, remortgaging etc – all have their own pros and cons, so look at the options very carefully.
  • Have your finance (loan, cash etc) sorted before going to the showroom – it’s a far better idea to know your maximum budget before you start looking at cars. You’re less likely to get sold something that’s out of your range, plus you’ll also be in a better position to bargain.
  • Haggle! – always try to negotiate the price, and once you think you’ve got that as low as they’ll go, try to get a few extras, such as GPS, mats etc. Be realistic though, afterall, car salesman have kids to feed too, so they need to be making some money. Probably not worth asking for a full tank of petrol these days as that probably costs more than the car itself.
  • Be prepared to walk away – there are thousands of cars out there, so if you don’t think you’re getting a good enough deal, be prepared to walk away and look elsewhere. Chances are the dealer will be on the phone to see if they can entice you back. It can also give you a chance to go and do some more homework about the deal if you’re unsure. Never rush into a decision which is costing you thousands.
  • Timing – it can be a good idea to go looking for cars at the end of the month when salesmen are looking to hit their bonus targets, and are less worried about making a big profit – they may just want a sale.

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