With so many different types of car finance on offer, it can be a minefield when you’re trying to decide which is the best deal for you. So to help you decide, we’ve put together this guide that all gets down to three simple steps on how you can get the best car finance deal.
Step 1: Check your credit score
The first thing you should check before doing any car finance comparison is your credit score. Knowing your credit score will give you an idea of the type of finance you’d be eligible for and how much it would cost. Keep in mind that the higher your credit score, the lower interest rates you’ll be able to access.
It’s also a good idea to check that there aren’t any errors on your credit file – if there are, take this opportunity to get them fixed (before applying for any car loans).If you want to check your credit file for free, click here to use our automated service. It will take less than three minutes.
Step 2: Decide how much you can afford to borrow
Once you have found out your credit score, it’s important that you find out what size of car finance deal you could potentially get. When deciding how much money you can afford to borrow, it’s important you don’t forget any other expenses. For example, taking into account the initial deposit and the monthly repayments.
Don’t forget that generally speaking, the larger your deposit is, the lower your monthly repayments will be.
By arranging your finance in this way means that you won’t have to borrow any money from family or friends. It also means that when the time comes for you to upgrade your car, you can simply add the new finance repayments onto your existing loan – instead of having to take out a completely new one.
It’s a good idea to use an online car loan calculator to get an idea of how much your monthly repayments might be.
Step 3: Shop around for the best deal
Having an understanding of how much you can afford to borrow and what your credit score is will give you a good idea of the type of car finance deal you’ll be eligible for. Now it’s time to find out which companies are offering these deals.
There are lots of different companies out there who offer car loans, so instead of looking at just one, why not find out whether there are better deals available elsewhere? You may be able to borrow more money if you use a specialist finance broker, or get access to better interest rates using online comparison sites.
As well as comparing car loan rates and loan amounts, it’s also important that you check their eligibility criteria – just because one company offers slightly lower monthly repayments doesn’t mean their eligibility criteria is the same as yours (ie: if you have bad credit, some companies won’t consider it).