7 Simple Ways To Pay Less For Your Car Finance

7 Easy Strategies to Save on Your Car Financing

Regardless of where you live, running a car is not cheap. During the pandemic, the cost soared and has continued to climb steadily.

According to several trusted industry sources, including Cox Automotive, Edmunds and Black Book, used car prices in the USA rose by between 32 and 36% during 2021. Since then, they have fallen back, but inflation means that they are still 33% higher than they were in 2019.

For consumers, it is even more critical that they keep the cost of financing their car purchases as low as possible. Fortunately, there are ways to do that and some of them are incredibly easy to implement.

1. Buy A Cheaper Vehicle

Top of the list is buying a cheaper vehicle. That could mean buying a smaller car, a cheaper one, or a vehicle that costs less to run. For example, one that enables you to avoid paying environmental fees, or costs less to service, tax, and insure.

2. Choose The Right Member Of The family To Buy The Car

If the vehicle is being bought for a family, consider buying it in the name of the person who has the best credit rating. Provided they are going to drive the car regularly there should be no issues with insurance. But check this first.

3. Consider Buying An Older Vehicle

Often, older vehicles work out cheaper overall. According to Lending Tree, typically, a car will lose 30 to 40% of its value during the first 5 years. After that, the rate of depreciation slows right down.

So, if you can find a used car that is in good condition, especially one with low mileage, buying it instead of a new one can save you a lot of money.

Of course, you will have to factor in the fact that it is more likely to need repairs. It will also have to undergo an annual or bi-annual official roadworthiness check, which will cost money. So, factor that into your calculations.

4. Fully Understand What Your Loan Options Are

Fully understanding the pros and cons of the different financing options will help you research the market and choose the best option for you. The main types of financing are:

·        Hire purchase

·        Personal Contract Purchase

·        Personal Contract Hire

·        Traditional Leasing deals

·        Direct bank or credit union loans

·        Co-signed financing

Researching all of the above is easy to do online. But do make a note of any questions that you have, so you do not inadvertently sign up for something that does not suit your situation. It is also worth checking out the option of releasing equity from your home to buy your car. Sometimes this is cheaper.

5. Use A Car Finance Calculator To Research The market

Work out roughly how much you want to spend, then research the market to see what is available. Key your details into a few car finance calculators to uncover the companies that are the most likely to offer you the best deals. When you do this, make a note of the final cost as well as what the monthly payment is. Using the final total, you will be able to compare each deal in a genuinely like-for-like way.

6. Read The Small Print – Don´t Get Tripped Up By Hidden Fees

When you go shopping for your car, take the time to read the contract in full before signing it. Make sure that you fully understand all of the fees and exactly what is included. Missing the fact that there is a mileage limit on a PCP package and going over that mileage can turn out to be an expensive mistake.

7. Be Savvy About Extras

Lastly, be careful about the extras. It is really easy to get carried away and agree to pay a bit more for things that you don´t need. If you are offered an extra that you do want, e.g., free road tax or insurance, work out exactly how much saying yes to it will save you. This is important when you sit down to compare the various deals.