When applying for car finance, it’s natural to think you are at the mercy of the lender where costs are concerned to an extent you are right, they have the final say on how much you pay.
But at the same time, this doesn’t mean there aren’t any other options. Rather than diving into the first car deal that comes your way, there are several steps to take and points to consider – each of which could add up to serious savings.
Here are six simple yet effective ways to save money on your car finance deal:
1. Work with a Broker
First and foremost, never apply directly – always work with a broker. Not only can a broker compare the market in its entirety on your behalf, but they also have access to exclusive deals and discounts from the lenders they work with. Given that the services of brokers are usually free of charge, it is the ultimate no-brainer for saving money on your car finance deal.
2. Check All Additional Costs
Don’t make the mistake of seeing what appears to be an unbeatable rate of interest and subsequently ignoring additional costs, what appears to be a superb deal on the surface could turn out to be costly in the long run. Take note of any additional arrangement fees, admin fees, completion fees and general commissions the lender may charge.
3. Get Your Credit Score in Order
If you have time, showing your credit score a little support ahead of time may not be a bad idea, if your credit score isn’t up to scratch ensure you exclusively target lenders who welcome poor-credit applicants.
4. Repay Your Loan Early
Assuming it is permitted in the terms and conditions of your contract, you could save a small fortune by paying off the balance of your loan early. This is something to discuss with your broker when applying for car finance, as not all lenders allow early repayment without penalties or additional fees. The more flexible the terms of your car finance deal, the better.
5. Pay a Bigger Deposit
If you can afford to do so, offering a larger deposit can often pave the way for preferential interest rates and lower overall borrowing costs. It can be tempting to save money initially by paying the smallest possible deposit but doing so may result in more expensive car finance long-term.
6. Borrow Sensibly
Borrowing more than you can comfortably afford is never a good idea. Along with potentially plunging you into a dangerous debit spiral, borrowing excessively also means elevated borrowing costs. The more you borrow, the more you can expect by way of interest, fees and so on over the period of the loan.
For more information or to discuss any aspect of car finance in more detail, contact a member of the team at UK Car Finance for an obligation-free consultation.