If you’re thinking about buying a new car, there could not be a better time. With the UK car manufacturing industry at an all-time high, quality cars are available at competitive prices.
The Society of Motor Manufacturers and Traders (SMMT) recently revealed that this year has seen British car makers achieve the best 10 month performance in a decade and the industry shows no signs of stopping.
In many cases, buying a new car actually works out cheaper than buying a used car as along with special offers and payment finance options, new cars are cheaper to run and won’t need anywhere near as much maintenance as used cars.
If you’re thinking of treating yourself to a new car, these are some of our top tips to making it affordable.
Know your credit rating
The majority of new cars in the UK are bought on finance as they are such expensive purchases. The key to obtaining a great finance package is having a good credit score, so if you have no idea what is on your report, it’s time you found out. You can request your credit report from a number of companies such as Experian, enabling you to see what finance companies can see, and giving you the chance to amend any incorrect information that may be harming your score.
Of course, if you have a low credit score this will impact your ability to obtain credit. Bad credit car finance provider Clearway offers finance packages specifically for those who have low scores, and has trained advisers who look at each applicant individually.
Regardless of your credit score, if you know what it is, you have a higher chance of locating and applying for a loan that you will most likely be accepted for.
Decide where to look for finance
If you take the time to research different types of lenders before you begin to apply, you will be in a better position. By deciding on what type of finance you are going to acquire before you choose your perfect car, you will not risk getting distracted and signing up to something in a rush to drive home in your new vehicle.
You can either obtain finance through a personal loan from a bank or a broker, or you can go through a car dealership. The majority of customers get finance through their dealership as it can be an easier process, and dealerships can ‘shop’ their customers application to a number of lenders, thus improving their chance of acceptance.
Whichever finance route you decide to go down, doing your homework beforehand will help you obtain the best rates and the fairest deals.
Go for what you need, not what you want
It can be tempting to go for the car of your dreams, but it pays to be practical. You may be dreaming of a sporty two-seater convertible, but that isn’t going to seem such a good idea when driving the kids to school on a rainy British morning.
Along with this, the car salesman may encourage you to buy extras, and even if they sound appealing, you have to draw a line if you want to keep your costs in check. To avoid spending a fortune, remember to only buy what you need, not what you want.
Determine your maximum car loan length
Most car loans are over periods of 48 or 60 months, but many loans are now lasting 72 or even 84 months. Remember that the longer your car loan, the higher amount of interest you will pay. Comparing the cash price of the car to what you pay over 72 months will make this point hit home and give you the reality check that may prevent you going down this route however tempting it may seem.
If you are thinking about choosing an overly-long car loan length so you can afford to pay the repayments, then it would suggest you can’t really afford the car. One of the problems with long loan lengths is that you could end up with a negative equity vehicle, and find yourself paying more for the car than it is actually worth. Most people change their cars every 2 to 3 years, so this is something to keep in mind.
Decide on an overall budget, be realistic, and stick to it!
It is vital to decide on an overall budget, to be realistic about that budget, and perhaps most importantly, stick to it.
Think about your income, your outgoings, and plan for the future; remember that life can throw unexpected curve-balls. Only spend what you can afford to pay back and don’t cut back on necessities such as rent or bills to afford a sparkly new car.