Improve your credit score
Many lenders will want to see what type of borrower you are, and they can do this by checking your credit file. Your credit score directly reflects how you’ve handled credit in the past and if you can be trusted to make repayments on time and in full. If you’ve failed to meet repayments, you may be more suited to cars on finance bad credit deals. It is possible to get a car on finance with bad credit, but you may not get the best deal. Lenders usually reserve their best rates for people with good credit scores as they are seen as less of a risk to the lender. Improving your credit score in the run up to your car finance application can help you to get a better deal and make it easier to get accepted.Save up for a deposit
Some car finance deals do require you to put down a deposit so it’s worth keeping this in mind before you start applying. You can pay for a car with no upfront payment but having a deposit can actually be beneficial to you. By putting more in, you are showing the lender that you have good money management and may help you get approved. It can also reduce the amount you have to borrow for the car which can reduce your monthly payments and lower your interest rate.Consider a used car
Your car finance repayments are based on how much you borrow. If you’re dreaming of a brand-new Audi, you can actually save money to choose a nearly new or used Audi finance deal instead. If budget is important and you want to look after the pennies, a brand-new car may be out of reach. The lower the sale price of your chosen car, the less you’ll have to pay overall. Choosing a used car can help to reduce your monthly payments and make your car finance deal more affordable.Choose a shorter term
A longer term with lower monthly payments can be attractive but you shouldn’t just focus on the monthly price. Instead, it can help to compare different loans. Monthly payments factor in the cost of additional interest that you pay. Paying for your finance deal over a longer period means you pay more in interest and can end up paying more overall. You should try to choose the most affordable monthly payment that you can meet each month with the shortest loan term possible.Shop around for the best deal
Car finance deals don’t have to be confusing, but it can help to take some time to compare different loans. It’s not just about the interest offered but also what you want from your car finance agreement. In the UK, there are three main type of car finance agreement which tend to be most popular. These include a hire purchase option, Personal Contract Purchase, and a personal loan. It’s worth exploring each as you may be more suited to one type of car finance deal than others. For example, if you want lower monthly payments and more flexibility at the end of the deal, PCP could be right for you. Or if have good credit and you’d prefer to own the car from the start, a personal loan could be better for you.
This is The Chequers Bath blog, a lifestyle blog mostly focussing on food, travel and general lifestyle posts.
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