Previous: Financing your car
Finance options for new cars
If you opt to purchase a new car, and you've decided on the make and model, you'll need to consider how you're going to finance your purchase.
There are several options open to you, especially when buying a new car from a dealer. These include:
Banks – the high street option.
Most will offer you a loan, especially if you’re a customer of theirs already. If you'’ve been a customer with a bank for a long time, you may find this option a simple process but it is worth noting that banks may take into account your previous financial history with them, not just your credit history. While high street banks may seem like an obvious option, always remember that it is likely that you will be able to get a better rate on a car loan elsewhere.
Car dealers – franchise and independent.
All car dealers like to offer you finance if they are licensed credit brokers. They will often offer attractive finance packages to go along with your car, with perks and add-ons included to sweeten the deal. However, it is worth taking great care when examining the breakdown of any deal. Most salesmen are paid extra bonuses on finance packages and are likely to offer you extra additions to your car and loan package – remember that they’re trying to sell you two different things at the same time, so may not be completely impartial.
Independent car loan providers.
These are the third main option, and can often be the most attractive to discerning buyers, with some competitive APRs available. Getting finance from somebody independent of the car dealer means you can get a quote upfront based strictly on your needs and circumstances and you can often have time to look at different options. Remember that car dealers will never give you their best deal straight away, and it’s their job to negotiate with customers - so getting a car loan approved before you buy can provide you with much more bargaining power.
Whichever method you choose, make sure you’ve done some homework before you approach a car dealer – you’re bound to find yourself in a stronger position if you do so. Leaving it all to the last minute almost guarantees you won’t get the best deal available, so it’s worth doing some initial legwork before you buy.
Previous: Financing your car
