Buying a car on finance is anything but unusual. In fact, most cars in the UK are purchased this way. After all, when was the last time you saw someone walk into a showroom and pay for his new vehicle in cash? At the same time, finding a suitable financial deal remains hard. For some potential buyers with a bad credit rating, it can even prove to be impossible.
However, buying a car on finance doesn’t always have to be cumbersome. In fact, it can even be enjoyable, as long as you keep the recommendations of our five-step-plan in mind.
Car on finance step 1: To buy or to lease?
The first question you’ll need to ask yourself is whether you really want to buy a new car on finance or whether leasing is an option. Over the past decades, leasing has admittedly become more and more attractive. Essentially, it means you will get a brand new model every few years and usually enjoy the benefits of a warranty over the entire lease time.
At the same time, you’re never the actual owner of a leased car. And whereas leasing can be cheaper than buying a new car, getting a used car on finance typically beats leasing in terms of costs. Which means that our from our point of view, buying is still your best option.
Car on finance step 2: Where to get a deal?
There are usually three options for getting a car finance deal: A bank, the car manufacturer or a credit union. There is no general rule as to which of these will offer you the best rates and conditions, but manufacturers have decidedly stepped up their game and can now compete with more established financial institutions. Some of the big brands have even set up their own bank to facilitate the process.
At the same time, there is another source for a car on finance, which is all too often forgotten: The dealer. As a middleman between car manufacturers and customers, the dealer can frequently provide you with the best possible deal. In fact, some particularly attractive financing models, such as zero percent offers, are exclusive to dealers. Which means they should be your first point of contact when buying a car on finance.
Car on finance step 3: Old versus new
When it comes to buying a car on finance, it is generally understood that one of the easiest ways to bring down the costs is to opt for a used car instead of a new one. But did you also know that when buying a used car, the depreciation is highest over the first year? As Moneysavingexpert have pointed out, a car loses almost 30% of its value over the first twelve months and just 15% over the next year. Which means you can slash nearly a third off the original price of a car and still get an almost perfectly new model.
Obviously, with cars becoming ever more reliable, even cars older than just one year can feel as good as new, while shaving even more off the original purchase price. Which means that these should be your first choice when it comes to buying a car on finance.
Car on finance step 4: Finding the right car
Until now, we have neglected a pivotal point in the entire process of buying a car on finance: Your choice of model. After all, the newer the car, the lower the interest rate. On the other hand, you can bring down the costs of your financing deal even if you’re buying a second-hand model, by selecting a model that is great value for money.
Here are some of the things you should take into consideration:
- What car do you really need? Make sure to note down your essential requirements, depending on what you want to use the car for. This does not rule out getting an exciting, beautiful model. But it will help you focus on what’s really important.
- When you’re buying a car on finance, interest is not the only thing you’ll need to pay. Some of the other costs associated with your purchase can significantly contribute to your decision as well. These costs include maintenance and servicing, fuel consumption, car insurance and many more. Calculate at least a rough estimate of all of these for each model you’re interested in.
- Especially when you’re buying a car on finance for the first time, some cars are better than others. Great cars for your first purchase include models such as the Ford Fiesta, which are efficient, reliable and offer great value for money. Many of these can be found at our Manchester showroom.
Car on finance step 5: What to do if you have a bad credit rating?
For many potential buyers, the process unfortunately ends here. If your credit rating has taken a hit, many dealers simply aren’t interested in selling to you – and the ones that are may offer extremely unfavourable interest rates.
At Concept Car Credit, however, you’re always welcome. Even if you have a bad credit rating, we can still offer you a great car at an affordable price. Just drop by and take a look at what’s available. Our team is looking forward to your visit!