Just because a car is classified as used, doesn’t necessarily mean that people will be able to afford it straight out of pocket, and finance is often a route taken by drivers looking to get themselves a reliable on a paying off scheme.
Finance for used cars can be very cheap and affordable, with monthly payments sometimes being a lot less than the actual insurance for the vehicle.
There are a few steps that can be taken before applying for finance to ensure you will get the best outcome seamlessly.
- 1. Know your credit score
Your credit score will effect whether dealers deem you responsible enough to be eligible for finance on a vehicle; if yours is low, you may struggle finding a suitable dealer. Some companies do offer services tailored to those with a poor credit score so it is best to be armed with the knowledge of where you are on the scale.
- 2. Decide which finance is best for you
Deciding what financing option is best for you is not a daunting task; it’s a simple process that is very case specific to each person. Options to choose from are hire purchase, dealer finance or personal contract purchase. Researching each option is the best way of ensuring that you understand what is on offer and what is best for you.
- 3. Gather as much deposit as you can
Whilst it is possible to secure a car on finance without a deposit, as a rule of thumb, 10% of the overall cost of the car is the rate that is usually requested by dealer before the agreement goes ahead. However, just because 10% is the minimum, this doesn’t mean that you can’t offer more; the higher the deposit you can offer a dealer, the more chance you have of cutting down your monthly payments, allowing for sensible budgeting.
- 4. Think about the repayment period
Realistically assess what point you are up to in your life; a long repayment period is there for exactly that, a long time. If you are planning a family soon, a long repayment period that crosses over into this could be a hindrance rather than a blessing as your budgeting alters and your expenses increase. A smaller repayment period with slightly higher payments may be a better option, as long as you stay within the limits that you can afford.
- 5. Give yourself a budget and stick to it
Don’t commit the cardinal sin of walking onto the forecourt and be lured in by the shiny cars that aren’t in your budget; stick to what you have allocated yourself. You know the phrase ‘champagne lifestyle, lemonade money’? It applies to cars, too. If you have a budget for a KA don’t come home with a BMW; nothing is wrong with either car, but if you can’t afford the BMW, then you can’t have it. Don’t fall into the trap of justifying an extra £50 a month or whatever the charge is to have a fancy car, chances are, the running costs may increase, too, leaving you in an uncomfortable spot financially. It is better to have a smaller budget car than no car, which is what you will end up with when you can’t afford the upkeep. Moreover, if your budget is tight, you can even opt for used cars finance at carbase.
- 6. Check the interest rates
Make sure the interest rates seem feasible and not ridiculous; knowing what interest you are going to pay will allow you to budget effectively. If you have a good credit score, there may be opportunity to bargain.
- 7. Have a barter
Sometimes you will get somewhere with haggling, sometimes you won’t. However, it is in the makeup of used car dealers so you are more likely to come to a better deal if you put yourself out there and be a little bit bold.