It’s one thing to find the perfect used car – but it’s quite another to find the best car finance deals to help you afford it. A car is one of the most expensive things you’ll ever buy, but car finance can offer the most effective way of spreading the cost of it.
With so many promises of the best used car finance deals, it’s easy to be overwhelmed. You shouldn’t rush into anything either. Otherwise, you run the risk of being tied into something that costs you more in the long run.
It can prove hard to decide which you think are the best car finance deals when you take into account everything there is to consider.
What is car finance?
If you can’t afford to self-finance your next car by paying for it upfront with savings, a credit card or taking out a personal loan, one alternative is a car (or motor) finance agreement. It’s a type of credit agreement that’s secured against the car you’re buying – new or used.
By signing up to this type of agreement, you’ll be borrowing the amount you need to pay for the car. You’ll then pay back that amount (with interest) in monthly instalments across a set period. Bear in mind there are different car finance options to weigh up.
Can I get a used car on finance?
It’s absolutely possible to get a used car on finance, although bear in mind it will depend on your credit score. The best used car financing options are no different to getting a car from brand new.
AA Cars CEO James Fairclough explains: “Just because a car is pre-owned, it doesn’t make it any less significant a cost to many people. A fifth of all used cars – 1.5 million – sold in 2018 were bought on finance, making it a popular way for buyers to spread the cost of their car.”
Where can I find the best car finance deals?
Online comparison websites: Like everything money-related, one way to work out the best car finance deals is using one of these websites.
The aim of these sites is to show the best car finance rates based on the details you provide – including secured loans, hire purchase deals and personal contract purchases (PCP).
While they’re a useful starting point, bear in mind not all providers are included so there’s a chance the best car finance deals shown aren’t necessarily the best available to you.
Dealer finance: Buying your next car from a dealer? You may be offered finance at the point of purchase. Nearly a fifth of UK dealers got 50% of their total margins from the commission on finance deals, according to a 2016 report from accounting association MHA.
Unlike a car loan, the repayment term of car dealer finance is typically 3 years. You may also get the best car finance rates too, maybe even 0% – though it’s more likely if it’s a new car.
One thing to bear in mind with dealer finance is how big the deposit and monthly payments are. A great car interest rate isn’t much use if you’re going to struggle with those payments.
Going direct: The best car finance deals that work for you could be waiting if you go direct to a provider. It’s in a provider’s power to give you a bespoke quote that reflects your personal situation – and offer tailor-made terms that work out better in the long-term.
If you apply through AA Car Finance*, we’ll use your details, budget and/or what car you’re looking at to match you with the hire purchase loan options available to you. And we can do this without affecting your credit score.
Can I get more for my money by negotiating?
When looking for the best new or used car finance deals if buying from a dealer, the power of persuasion can help. The first place to start is by pushing for a discount on the cost of the car. Having less to pay from the outset means the total cost with any finance deal is lower.
It can also be worth negotiating to get the best car finance rates out of a dealer. If you feel the APR on offer is too high, ask to get it down. It can help if you know you can get a better rate elsewhere and challenge the dealer to match it to secure your business.
If your dealer won’t budge on the price, can you get a service plan or another extra? A free service plan could save you lots if your finance agreement says you must get a main dealer to service your car. Check the price of the service plans available and work out how much you could save if you can get one included.
Dealers aren’t the only car finance providers who can offer you extra. With AA Car Finance, you’ll have a personal finance adviser to help you find the best car finance deals for you, as well as free 12 months’ breakdown cover too*. So why not check your eligibility today?
In the long-term, it pays to shop around for the best new or used car finance deals that fit your situation. Don’t just look at the list price of the car itself and the APR. Think about the deposit, the monthly repayments and total overall cost of the car with interest factored in.
Not sure or have any doubts? Walk away. Don’t agree to anything unless you’re certain it works for you. Get your quotes in writing, read the terms and know all the ins and outs. It could be the key to getting your pick of the best car finance deals out there.
Image courtesy of iStock.
* The free Basic Breakdown Cover offer is only available when a vehicle is purchased through AA Cars and must be redeemed within 12 months. It’s for non-Members only. AA Breakdown Cover is arranged by Automobile Association Insurance Services Limited
AA Car Finance is a brand style of Used Car Sites Limited. Registered address: Fanum House, Basing View, Basingstoke, Hampshire, RG21 4EA.
Used Car Sites Limited is authorised and regulated by the Financial Conduct Authority (firm reference number 671360). Used Car Sites Limited (trading as AA Cars) is a credit broker which introduces AA Car Finance customers to Evolution Funding Limited. Evolution Funding Limited is authorised and regulated by the Financial Conduct Authority for credit brokerage (firm reference number 669005). Registered address: Thompson Close, Whittington Moor, Chesterfield, Derbyshire, S41 9AZ. Evolution Funding Ltd and Used Car Sites Limited are credit brokers not lenders. Finance subject to status.