at all possible, save your money and use cash. Putting savings together
the trade-in value of cars already owned is the way most people buy. Cash
popular with sellers and a top deal closer when haggling over price. It's also
cheapest in the long term. On the downside, carrying cash is risky and you
little leverage over the dealer that sold you the car if something goes wrong.
no problem at a dealer but tricky when buying privately, as the seller probably
won't let you take the car away until the cheque clears. When you
pick the car up you could find no seller and no car, especially if you
met them at their home.
always get a car insurance quote from Direct
as they don't take part in the price comparison websites.
Draft: basically a secure form of cash. You'll pay the bank a fee to get one,
but they're as influential as cash and just as good to the seller. Expect the
seller to want to check whether the draft is genuine, so also take along the
details of the bank branch that issued it.
you don't have the cash or would prefer to spread the cost, there are many
to borrow money.
looking at ways to finance your next car and the different deals available from
providers, with so many variables involved like size of deposit, rate of interest,
number of repayments and more, make sure you compare like-with-like. Look
at each deal's APR (Annual Percentage Rate). You're after the lowest rate, to
borrow the money you need at the least cost.
just accept a car dealer's rate - find a better deal and use it to bargain the
dealer's rate down. Ensure factors like deposit and repayment periods are
same between deals you're comparing. Ideally look at the total cost of
deals including interest, not just the monthly payments. Then you can really
how much more you're paying than the price on the car's window.
don't forget to look at the cost of getting out early, if you need to down
the line - there are often penalties. Aim for a deal that strikes a balance
between affordable monthly payments and total cost of the loan.
other factors like length of the loan (shorter = cheaper overall, but will cost
more monthly) and what sort of security you have to borrow against.
loans, for example against your house, are usually cheaper. But you
home if you do not keep up payments for any reason. The cost of the loan will
also depend on any (often expensive) insurance or payment protection you sign
up to. Plan how you would make the payments if you lost your job or become ill.
Expect a hard sell on this, as commissions for salespeople are hefty. So decide
whether you want it before you go to do the deal.
you're refused finance, you can find out why. Rather than being due to something
you've done, it could just be caused by where you live, wrongful financial association
with someone else in your family, or a mistake on your
credit history. Rather
than pay a fortune with a dodgy lender just because they'll take you, see if you
can sort out whatever the problem is with the credit
reference agencies. For
a small fee from Experian
you can get a copy of your credit record and can dispute any mistakes.
if a lender wants to charge you an 'Admin' fee, try refusing to pay it. You
well get away with it. It's not as if the lender isn't making money on your loan.
Loan: Provided by a wide range of banks, building societies
companies, this is often the most easy finance to obtain. You don't need any security
(like putting your house on the line) and arranging a loan
often takes only
a phone call or a session on the internet. You will need a clean credit history
though. Setting up a personal loan in advance means you can
still be flexible
when it comes to buying, and you own the car immediately.
There's no deposit
to pay either. On the downside, interest rates tend to be
higher than other
types of loan and the bank mightn't lend you enough for more expensive cars.
finance: as above but provided by a car dealer rather than direct from a bank
or finance company. Interest rates can be lower for smaller loan amounts
you might get a more flexible repayment period for more expensive cars
from a bank. If using dealer finance, you also stand a chance of haggling
even lower price for the car you're after, as the dealer will also get
on selling finance. And don't forget to haggle over the interest rate itself as
much as you did over the price of the car. Just make sure you read the small print
- ensure that cheap finance headlines don't mean over-priced cars or
Purchase: you pay a deposit and make monthly payments over an agreed period,
but you don't own the car until you make the last payment. Neither can
sell it until you've settled any amounts outstanding. Missed payments
mean you lose the car. HP is often used to finance more expensive purchases or
by those with a poor credit history, and it can work out cheaper
than a bank
loan. Like other dealer finance, signing up to HP can help drive
down a car's
ticket price, as the dealer will get a kick-back from the finance company. But
it's likely to cost you if you want to get out of the deal early.
Contract Plans (PCPs): more popular with new car buyers than for
cars and is a bit like leasing a car. You pay a deposit and then monthly payments
(likely to be smaller than HP) over an agreed period - usually just a
years. At the end of the contract, you can either pay a lump sum to take ownership
of the car, use its agreed value to part exchange it for another car, or simply
give the car back and walk away. Lower monthly payments are handy for driving
a better car than you can afford, but interest rates tend to be higher and make
sure you budget for that final big payment. You may also be limited to a fixed
annual mileage and, unless you pay extra, will have to keep the car
serviced or be penalised.
/ Contract Hire: you never get to own the car. You make monthly payments with
no cash up front. Servicing costs, road tax and disposal of the
car at the
end of the contract are down to the leasing company. You could face
though if you go over your agreed annual mileage or give the car
High monthly cost but can be cost effective.
your mortgage: interest rates are on the up but extending your mortgage to
fund a large purchase is still one of the cheapest ways to borrow. Just check
fees for amending your mortgage and ensure you can afford the increased repayments
if rates continue to rise, or your house may be at risk.
your rights when buying a used car >>