What You Need to Know About Car Finance

When purchasing a car, there are an often overwhelming number of finance options available. But, the finance options offered to you by the dealer are normally not the cheapest, so you should consider an independent finance solution.

Dealers might offer you a 0% finance option which are actually good if you can afford them. They require you to pay a large deposit (around 35-40% of the cars cost) and the rest is payed back in interest free monthly payments. The repayment period will tend to be shorter than other methods, so the amount you pay per month is usually higher, and this form of finance isn’t usually available on all cars.

You could opt for getting a personal loan however. This is only worthwhile financially if you have a good credit history, and will involve you borrowing the full amount needed and paying for the car in full. You then pay back the amount over a period of one to seven years.

Getting the Best Deal You Can

Bargaining will get you the best deal, so it’s worth spending your time on the deal. Often, dealers will do what they can to make a finance sale as it’s not uncommon for them to actually make more money selling a finance deal than from selling the car (e.g. the commission they earn from extras). People with good credit records will get better deals on personal loans with low interest rates; get a quote and use this when bargaining. You can also visit more than one dealer and use the quotes against each other to get the best deal!

You need to know the APR of the deal – this is really the own number that lets you properly compare different finance options. Sometimes, dealers avoid bringing up APR when talking with you – make sure you ask to enable you to make a fair comparison.

Remember that longer repayment periods come with lower monthly repayments. Dealers will often quote you a longer period because it makes the finance look cheaper. However, longer repayment periods usually are usually more expensive per month, so add up the repayments to see whether that longer period is really worth it.

A really important point is to remember to take your time. It is easy to be pressured into something, to signing a deal you were not 100% about. Some dealers are very good at doing this! Never go with an option unless you’re absolutely sure about – take your time, do your research, and be confident in your choice.

Image source: http://www.fotopedia.com/items/flickr-6950308242

For more information about commercial vehicle finance, please visit the website of NGI Finance.

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