Category: Car Finance

Best ways to Finance a New Car

If you are looking to buying a new vehicle, whether it is a brand new or second hand one, you will be likely to be paying a significant amount of money for it. This means that it is a big spending decision and worth thinking hard about before you go ahead.

The best way to pay for anything is usually to use savings that you have already. This is because they are convenient and free. You will not have to organise a loan with anyone, which can take time and also you will not have to consider the costs of the loan and work out how you will repay it. Once you buy the car, you will not have to worry about the cost of it. Some people may worry about using their savings, thinking that they might need them to fall back on in the future. It is an understandable concern, but it can save a considerable amount of money if you do use them and so it can be worth it. You may be able to fall back on your overdraft or credit card if you really need to and otherwise you can start saving up again and will hopefully have enough to feel comfortable very soon.

Many of us do not have enough money saved up to pay outright for a vehicle when we need one. If we have some savings though, it can be worth thinking about putting those towards the cost of it, for the reasons outlined above. You may have to finance the rest of the vehicle using an alternative method. If you have time, it could be worth considering whether you could save up for it. Obviously if you need a new vehicle immediately then this may not be possible. It may be that you are replacing a vehicle that can no longer be driven and therefore cannot wait, but if you are just considering buying a new vehicle but still have options which work if you do not get one, then it could be better to wait and save up the money that you need, so that you do not have to borrow any.

If you do decide to borrow, whether it is the full amount of a percentage of the cost, then you will be wise to compare all of your options. It can be tempting to use the loan offered by the car dealer but this might not be the best option for you. Although it will be convenient, as you can buy it from the same place as the car and you may even be offered a discount if you use their finance, there could be cheaper options available. It is worth doing some research and seeing what you can get before signing anything.

It is likely that you will need to borrow a significant chunk of money and if this is the case, you will be most likely to need a personal loan. These tend to have a regular repayment requirement and so each month you will need to pay interest as well as a chunk of the loan off. How much you have to pay each month will depend on how much you borrow and how long you repay the loan over. It is really important to make sure that you are happy that you can find that amount of money to repay each month. It is good to consider how much you normally have spare at the end of the month and whether this will be enough to make the repayment If it will not be enough, then you will need to either have the loan for a longer term so that each payment is smaller, but end up paying more in interest or figure out how you can earn more money each month or spend less so that you have the money that is needed.

It is well worth comparing the rates on the different loans to see which is the cheapest. By doing this you could save a significant amount of money. It is worth noting that the interest is not the only money you will be paying out. There may be some administration fees as well. You may be tied in to a certain period of time if you take out a fixed rate and if you want to switch lenders or repay early you may have to pay an early redemption fee.