The quick car finance option is rarely the best one

Take a test drive in a new or used car and it probably won’t be long before the salesperson sitting next to you utters the f word. Yes, finance. Unless you’re fortunate enough to be in a position where you can pay with cash, this will be a very important factor when it comes to sealing the deal on your potential purchase.

Accepting the finance terms offered to you by the dealer selling the car may look like a quick and convenient option, but taking this easy route could cost a lot of money – possibly thousands of pounds. 

As with any type of loan, the general rule of thumb with car finance is that it always pays to shop around. While the finance deal offered by a car dealership may be a decent choice when it comes to overall value, it’s important to remember that the salesperson is almost certainly in line for a bit of commission. This is perfectly above board, but it does mean they’ll be eager to persuade you into accepting their deal, even if it’s not the best one for you when compared with the competition. So if you have your heart set on buying a car, take some time and do your research into all of the deals that are available to you before you visit a showroom.

Your credit score will play a deciding role before you sign on the dotted line, but there’s still a chance that you could negotiate to knock down the applicable interest rate or monthly payments. It’s undoubtedly tempting to shake hands and drive home immediately after you’ve test driven your prospective new car, but a bit of extra time and effort can potentially save you a small fortune. 

There are plenty of finance providers and brokers out there, along with several online tools that will allow you to compare deals with ease. As well as the usual Personal Contract Purchase (PCP) and Hire Purchase (HP) avenues, a personal bank loan could also be an option. If you’re not too fussed about actually owning the car, you could even look at leasing through a Personal Contract Hire (PCH) plan. Each type of finance has its unique pros and cons.

Once you’ve chosen your preferred method, there’s usually a plethora of deals available, so think carefully before shaking the car dealer’s hand.

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