How To Dodge The Pitfalls Of Car Finance Deals

It’s the day you’ve been waiting for. You’ve saved up enough cash to finally get yourself a new car. Purchasing a new car is exciting, but it can also be fairly stressful, with so many questions looming. How can you be sure you’re getting the best deal? Should you privately sell or trade in your old car? Are all car salespeople just looking to rip you off? Buying a new car is one of the most expensive purchases that people make, so it’s definitely worth making sure that you aren’t losing out financially.

Navigate The Minefield Of Car Finance

The terms and conditions of the average car finance deal sometimes feel like they’re designed deliberately to be misleading and complicated, and a lot of people openly admit to not fully understanding the payments on a new car purchase deal. This is a recipe for disaster. The key thing to bare in mind is that cars are depreciating assets, meaning that they lose value over time, usually the second you drive them off the lot. So don’t kid yourself that your new vehicle is an investment – even if it’s a purchase that will help you to make money, like buying a truck to start a business, it’s still an expense that needs to be treated carefully. Save up as much cash as possible so that you’re financing the bare minimum, as you’ll typically be paying high interest rates if you’re a first-time buyer or have less than perfect credit.

Consider Your Options

Think carefully about if you really need a brand-new-from-the-factory vehicle, as you can find better deals on nearly-new or slightly used vehicles that can save you thousands for the sake of a few months. You can also look for ex-demonstrator models around the time of a plate change. If it must absolutely be new, aim to pay cash or as close to that as you can manage. The larger your deposit, the better deal you’ll be able to negotiate. And look at other sources of funding, such as a bank loan, for the balance. You’ll generally be able to access a better rate of interest than a car manufacturer’s finance scheme. The key things to compare are the APR (Annual Percentage Rate) , the length of time that you will be paying the loan back for and the amount of monthly repayments – think about these as a proportion of your monthly budget. Look at the total amount you’ll have to repay, as this can vary drastically depending on the deal you secure. Sometimes, dealerships may have special financing deals available on a specific model. This usually means the total cost is not available to be negotiated, but it could be a cheaper deal overall than buying another model which can be negotiated.

Sell Your Old Car

It should be possible to raise some money towards your new car by selling your old vehicle, if you have one. You can even sell non working cars for cash and it all helps towards what you can afford. If you do sell your car, use a second hand car pricing tool to figure out a fair asking price for the make, model and condition of your vehicle. Do your research on what similar cars have sold for, and decide whether you want to undertake a private sale or trade in your vehicle to the dealership or a specialist car buyer – you’ll usually get the most profit selling privately, but if your car is unlikely to fetch much it can be less of a hassle and provide good negotiation leverage to sell to the dealer.