Are you… right now look for your own car? It can be difficult to know which type of auto finance is the cheapest and how to get the best car finance deal possible. If you want to save money but also spread the cost with car finance, there are several ways to find car finance the smart way. The guide below explains how you can get cheap car finance and put yourself in the best position when applying for car finance. It should be noted that secured car financing is not actually possible and you may need to pass a credit or financial capability check before you can proceed with car financing. That said, let’s take a look at how to get the lowest auto finance rate.
Increase your credit score
When you apply for car financing, you will usually have to pass a credit check. Lenders use information from your credit report to predict what kind of borrower you will be. If you’ve missed payments in the past, have no credit history, or have high existing debts, you could end up with a bad credit score. Lenders tend to favor people with better credit scores because they are less risky to lend. Usually, people with good credit scores have a long history of good credit management and can meet their repayment deadlines. Lenders can reserve the lowest interest rates for those with better credit, which means you’ll pay less overall. Raising your credit score in anticipation of your financing application can help improve acceptance rates and lower the interest rate offered.
Know your financial capacity
Knowing how much you can afford to pay each month for car financing is really important. Many lenders can do an affordability check to see how much you can comfortably afford. They look at your income and expenses and see how much you could spend on a car. You can use a auto finance calculator to see how much you could borrow based on your monthly budget and credit score, then shop for cars within your budget before you apply. This can help you get a realistic idea of the types of cars you could afford.
Choose a smaller loan
Opting for a smaller loan can help reduce the total amount you pay. One of the cheapest ways to get a car is through PCP finances used cars which allows you to spread part of the cost of the car you have chosen. Used cars generally have a lower value, which can help keep costs down. PCP payments tend to be lower because you pay the cost of depreciation instead of the value of the car. For many people, choosing PCP can mean they can get a newer car than they would with cash and pay for it in affordable monthly installments.
Save for a deposit
If you want to get the car you want and don’t want to pick an older car, you might want to consider putting more into your auto finance deal. Having a deposit can show good money management to potential lenders and can help you get accepted. Putting more money in for financing means you reduce the loan amount and don’t have to borrow as much from a lender and can help lower your monthly payments.
Shop for the best rates
There are so many places you can go to get financing these days. From personal loans provided by banks to PCP agreements directly from the dealer, there are many options available to you! If you want to compare a number of lenders and don’t want to apply to multiple lenders, you might consider using an auto finance broker. Auto finance brokers have access to a range of lenders and can compare packages on your behalf.