5 Ways to Save Money on Car Finance

Getting a car on finance is an affordable way to spread the cost of owning a car that you may not have first thought you could get. There are many affordable car finance deals but how can you get the best deal possible?

There are a few ways in which you can lower the cost of your car finance agreement.

Saving money on car finance

1. Use a car finance broker

Many people still think that its easiest to get car finance at a dealership. However, it can be cheaper and also less time consuming to sort you finance with a car finance broker. A car finance broker is essentially the middleman between you and the lender. They take your application and match you up with the most suitable lender from a wide lending panel.

Car finance brokers can also help people who are struggling to get approved due to bad credit. This can save you time and money as they do all the leg work for! Car finance brokers such as Refused Car Finance also don’t charge any fees for using them!

2. Work on your credit

If you’re looking for car finance with bad credit, you may want to look away now. Unfortunately, people with better credit score are usually offered the best rates. This is because they are seen as less of a risk to the lender and can be trusted to pay back their finance.

If you have had trouble in the past meeting your repayment deadlines, you could consider increasing your credit score prior to a car finance application. This can take a little time but the easiest way to increase your score is to showing evidence of making your payments on time and in full each month. You can also consider clearing any existing debt before applying for more.

3. Put down a larger deposit

Car finance agreements such as hire purchase or personal contract purchase usually require you to put down a 10% deposit. Having a deposit to put down can make you more favourable to lenders and also helps you save money. By putting more in, you can reduce your monthly payments and how much you will end up paying overall.

If you need a car quickly and don’t have a deposit to hand, don’t worry! There are many 0 deposit car finance deals available with affordable monthly repayments.

Used cars
photo credit: Zelda Richardson / Flickr

4. New vs. used

Depending on what you’re in the market for, you could consider both a new and a used car to see if you could get the best deal. Used cars are generally cheaper to finance as they cost less. However, you should rule out getting a new or nearly new car too.

Many new car finance deals come with super low interest rates which will reduce how much you will pay overall.

5. Refinance your current car loan

If you already have a car on finance and want to lower your payments, you could consider refinancing your car loan. Refinancing is when you take out a new finance agreement on an existing car finance loan. You will use this to settle your current finance in a one-off payment and then pay the new agreement off.

Refinancing your current loan usually lowers your monthly repayments. Many people with bad credit take out a car finance agreement and make each payment every month to rebuild their credit score and then choose to refinance for a better deal.

Having a better score at this point can lower your interest rate too. This will help to reduce the amount you pay overall. It is recommended you refinance your car after the halfway point and not any earlier if you can help it.