Chances are, if you’re planning on buying a car, it will be on finance. Car makers like finance because it means lots of drivers are essentially renting their cars and swapping into new models every two or three years.
And there are advantages for buyers. They’re not tying up large sums of money in a depreciating asset, and it helps make cars affordable. But to get a better deal on finance, you’ll need to follow these steps…
1. Line up your discounts
It’s worth remembering there are usually discounts available from the dealer and the car maker, depending on if you’re paying cash or using finance. If you’re a cash buyer, you’ll find out what kind of discount the dealer can offer. When you buy a car using finance, the car maker’s discount – usually called something like a deposit contribution – comes into play.
It’s important to remember that just because you’re entitled to a deposit contribution, that doesn’t mean you shouldn’t haggle for the dealer’s discount too. Just remember to agree on the price of the car before discussing the finance deal.
2. Check the maker’s website
The more you know about what offers are out there, the better. And by checking the manufacturer’s website, you’ll find their latest deals.
For example, deposit contributions might increase towards the end of March, June, September and December in order to help meet quarterly sales targets.
Also check out what what rival companies are offering, as a good salesman won’t want to lose your business to a rival.
Remember, finance doesn’t have to be provided by the car dealer
3. What finance do you want?
Assuming you want to buy the car on finance, and most of us do, research the best package for your needs. Most car dealers will nudge you towards Personal Contract Purchase (PCP). Monthly payments are generally lower on these because they’re only based on part of the car’s value. But if you want to own the car eventually, hire purchase may prove the cheaper option in the long term.
You may also find that interest rates differ between finance packages: some will attract zero per cent APR, others five or six per cent. And remember that finance doesn’t have to be provided by the dealer. There’s no shortage of products from independent lenders that buyers should weigh up or use to drive down a dealer’s APR offer.
4. Don’t fall for over-inflated extras
The sales person’s job is to play on your insecurities. They’ll point out how regular comprehensive insurance won’t enable you to buy a replacement new car if yours is written off. To do that, you’ll need GAP (Guaranteed Asset Protection) insurance. But the GAP policies they offer could be expensive and may not be as comprehensive as you’d hope. It’s worth checking online for other GAP insurance quotes.
Do you need paintwork protection? Again, it’s tempting to think your pride and joy needs it, but will you get the best value buying it from the dealer?
5. Get it in writing
Make sure you get your offer in writing, including any extras you might have chosen, the deposit, number of monthly payments, how much any charges are, discounts (if there are any) and what the APR is on the loan.
The dealer may be reluctant to do this, but insist. It’s the only way you can compare like for like when you visit another showroom and see if they can match or beat the deal on the same car, or a rival model.