Around 90% of people will purchase a new car on finance, but the rates you pay each month can depend on a number of factors. In many cases, two people going into a car dealership to buy the same car can often come out with two different prices. From negotiating and buying at the right time, Quick Car Finance offers its top 10 tips to save money on car finance.
1. Buy at the right time
Car dealers have targets to meet each quarter and buying a new car closer to the end of this target is when they are going to be more likely to slash the prices and offer a better deal.
Based on quarterly sales, the best times to buy are end of March, June, September and December and not only can prices be cheaper but they may offer large deposit contributions on their models.
Equally, try avoid busy times of the month or year such as peak summer when people are looking for convertibles or wanting to buy cars to reward their children’s exam results.
Instead look at the middle of a snowy winter or quieter periods of the year when bargains are going to be easier to find from car dealers.
2. Choose the spec of the vehicle
There are various specifications on a standard vehicle that can make them more expensive – and opting for these specifications below can make your car finance far cheaper. This includes:
Petrol over diesel cars
Manual over automatic
Hybrids over regular
Lower CO2 emissions
3. Buy pre-reg cars or those used for test-driving and showrooms
Pre-reg cars can come with a discount of up to 70%, since these are vehicles purchased up to 6 months before by the car dealership to hit a certain target.
Since these cars have already tehnically had an owner, they classify as used cars, despite being completely new. Better yet, the car dealer has already hit their sales target, so you can drive an even harder bargain on these vehicles. To find out more, you simply need to ask the dealer for availability.
Like the cars used for test driving and in showrooms, they are completely brand new but are cheaper because they are not out of the box. Again, the dealers will be looking to flog these, so you are in a good position to negotiate hard on price.
4. Make a higher deposit
Like when you buy a house, putting down a higher deposit on your car, bike or van will mean that you own more of the car and this will result in lower monthly payments.
Overall, your car finance may not be cheaper, but certainly if you were buying a car with no deposit, you would be prone to paying higher monthly repayments.
5. Do part-exchange with a vehicle in good condition
If you part-exchange your existing vehicle, this can be put towards the purchase of your new car. Selling your car privately is always going to command a better deal than selling your vehicle to the dealership, since you are paying largely for the convenience.
Ideally your car needs to be in good condition and it could be worth fixing any quick dents and scratches to avoid losing extra money on your vehicle.
6. When at a dealership, haggle and negotiate
When visiting a dealership, you need to turn on the negotiation skills and this includes:
Starting at a much lower price than the one offered
Rejecting the first offer
Not being afraid to walk
Speaking to multiple staff at the dealership
Visiting more than one dealership
Bringing in offers from competitors, adverts and magazines
7. Use brokers and price comparison
When using an online broker such as Quick Car Finance, you are able to access over 48 finance options in one place and the ability to search across the whole of market can be a lot more cost effective than going to your local dealership.
Doing your homework is key when making a large purchase for something like a new car or van – and going into the dealership with a bit more insight and education can help you when it comes to negotiating and asking the right questions.
8. Better credit scores, better rates
The better your credit score, generally, the better rates you should receive on a car loan. This is based on the idea that you are considered to be at a lower risk of default based on successfully repaying other types of credit on time in the past.
Of course, other factors come into play, such as your income and affordability – because even if you have a good credit score, you may be limited if you have a huge mortgage, several other cars and debts on the go.
However, for young people with no credit or little credit histories, and for those with bad credit histories – there are certainly a few things you can do to improve your credit score. Short term, you can join the electoral register and cancel any store cards or small credit cards that you do not use.
Long term, you should look at consolidating and paying off any debts, using a credit builder credit card to build up your score and using a portal such as Experian or Noddle to constantly check that your score is improving.
9. Repay your car finance early
With the average car finance term lasting 3 or 4 years, the longer your agreement, the more time you are essentially ‘borrowing’ the car for and more interest is building up over time. If you can pay off your car finance agreement early, you will essentially own the vehicle and accumulate less interest.
You have to make sure that there no early repayment fees, known as ‘settlement fees’ and that these are not too high. Equally, you need to check for negative equity, whereby the amount you pay off is less than the amount you'd get if you sold your car today – in which case you may be better off waiting.
For the very least, you could look at making large repayments each month or the occasional over-repayment to bring down the overall cost.
10. Ask for extras
You can continue to negotiate with your car dealer and often, you can have warranties and servicing included in the pricing for a certain period e.g 1 year or for a certain amount e.g £1,000.
Other things include gap insurance, rust proofing and paint and fabric protection.
Everything is negotiable and when they have sales targets to meet and advisors will always be looking for ways to seal the deal.