Buying a car is not a simple decision. When it comes to financing, there are many options. You also need to consider running costs. In fact, it’s probably the second most expensive thing you buy – right after your home. So it’s important to choose the best way to buy a car for yourself.
Cash or savings?
Use the Car Costs Calculator to calculate the total cost of this purchase. The cheapest way to buy a car is to finance all or part of your cash – this is because any loan or financing agreement involves paying interest.
• Make sure you save enough to pay for the car.
• If you don’t have enough money to buy a car in full, you can use it to get the largest deposit.
Did you know that personal loans are the cheapest way to finance a car transaction, but only if you have a good credit rating. You can get personal loans from a bank or financial services provider as long as your credit rating is good.
Make sure that the loan for buying a used car is not secured by your home. Otherwise, you’ll risk putting your home at risk if you don’t meet your repayment schedule. Look around for the best interest rate, comparing the annual interest rate, including the fees you have to pay, as well as interest.
• It can be taken care of by phone, internet or face to face.
• Covers the entire cost of the car.
• Can find a competitive fixed interest rate if you look around well.
• You may have to wait for funds to appear, but some lenders make funds available almost immediately.
• Other loans may affect interest.
Borrowing a car: what is worth paying attention to?
When comparing car loan deals, there are a few key things you need to do before making your final choice.
• Make sure you can afford the monthly payment.
• Compare the total cost of borrowing, including all loan fees.
• Watch out for early repayments or other fees that will start to appear if you exceed the expected limit in personal contracts (as well as personal leasing).
• Compare interest rates, looking at the annual interest rate, which includes all the fees you have to pay. Remember that a higher deposit usually means a lower interest rate.
• Think carefully before purchasing payment insurance or other insurance, such as GAP coverage, which can be expensive and can provide limited protection and the overdue financing is greater than the value of your car.
Using savings is the cheapest option for buying a car, and personal loans are the cheapest way to rent a car, but only if you have a good credit history. If you have bad credit ratings, you may have to choose one of the alternative financing methods to buy your car.