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How to Make Sure You Are Not Overpaying for Car Finance

dont overpay car finance
UK Car Finance
09, Jun 2022

Nobody likes to think they are overpaying for any form of credit, including car finance. But with such a huge network of providers all competing for your business, how can you be sure you are getting the best deal?

Unfortunately, getting locked into an uncompetitive car finance deal means just that – you’re stuck; consequently, the key to ensuring you don’t overpay for car finance means ensuring you get the best possible deal in the first place.

With this in mind, here’s a brief overview of what needs to be done to ensure you get the best deal available:

  1. Work with a Broker

Comparing the market manually is the preferred approach for most.  However, there are some car finance specialists in the UK that offer their services exclusively by way of broker introductions. Elsewhere, others reserve the very best deals for customers who apply via brokers.

Comparing the market is essential to ensure you get the best deal, but comparing the market in its entirety is only possible with broker support.

  • Check Your Credit Score

Imperfect credit will not necessarily count you out of the running for affordable car finance. However, targeting the right lenders with a less-than-ideal credit score is essential. Some lenders refuse to work with ‘subprime’ applicants entirely, while others specialise in low-cost credit facilities for poor-credit customers.

This is another area in which broker support can prove invaluable, ensuring your applications are submitted to lenders appropriate for your requirements.

  • Pay a Bigger Deposit

A deposit is almost always payable when taking out car finance. As with most secured credit facilities, larger deposits pave the way for more competitive rates of interest. If doing so will not completely break the bank, it is therefore advisable to consider paying the biggest deposit you can afford.

Your deposit payment will be subtracted from the total balance of your loan, reducing the size of your outstanding debt and saving you considerable sums of money.

  • Repay Your Loan Faster

The same can also be said for shorter repayment terms, which can likewise result in a major reduction in borrowing costs. Repaying car finance shorter-term inevitably means higher monthly repayments. Even so, the money you stand to save over the life of your loan in interest could be considerable.

Work out exactly how much you can afford to pay per month in accordance with your budget, and repay your loan faster if possible.

  • Switch Providers (If It’s An Option)

It is not always possible to exit a car finance agreement early, in order to switch to a new provider. Elsewhere, the option may exist, but may bring heavy fees and penalties into play. But where switching is an easy and affordable option, it is always worth considering.

Chances are, any number of competing providers will be more than happy to take your business and offer you a significantly more competitive deal than your current provider.


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