Advice on Getting the Best Finance Deal

Before you rush out to buy that new car, it's worth taking a look through these tips to make sure that you get yourself the best financial deal possible.

Don't Be Pressured into Dealer Finance

If you're buying from a dealer , you may find that selling you car finance is actually more important than selling you the car itself. It's fairly common for car salespeople to earn more from selling extras such as finance, than from selling the car. However, if you have a good credit record, a personal loan may actually offer much lower interest rates.

Don't allow any salesperson to put pressure on you into signing an offer 'only available today'. In the majority of cases, a similar or better deal will be available tomorrow, either at that dealer or at another. Don't be afraid to get offers from a number of dealers and play them off against each other.

Check the Repayments

Some salespeople will add a number of years onto a loan to make the payments look more affordable; the longer the repayment period, the lower the monthly repayments. However, you should be aware that a longer loan period will cost you more in the end. For example, a £10,000 loan at 10% APR will cost you £320 a month over 3 years and only £210 over 5 years. Although this may sound cheaper, the 5 year loan will actually cost you an extra £1,080 (a total of £11,520 paying over 3 years, £12,600 for 5 years).

Some dealer may give you the repayments as a daily or weekly figure, again to make them look more affordable. This can disguise an expensive deal; for example, £11 a day may not sound too much, but means you'll be paying about £335 a month.

It's also a good idea to ask to see examples of repayment plans with and without extras such as payment protection and other insurances - these push up the cost.

Check the APR

It is essential to find out the APR (annual percentage rate), as this will allow you to compare one credit deal with another. However, many salespeople will avoid discussing this rate, preferring to discuss the flat rate, which doesn't take account of fees or when the interest is paid, making the deal look less expensive. Make sure you find out the APR from them though, as this is the only real way to compare the total cost with other types of finance, such as a personal loan. Ask the dealer for the total cost of finance, including fees, interest and all other charges.

Shop Around

Take your time to research the deals that are available to you. You can use the Internet to see what offers are about and to find out the best rates from lenders.

Don't assume that your dealer is offering the best rate; always make sure you compare with other lenders. You may find that your dealer offers you a discount on the car only if you take its finance, however, don't rush to sign on the dotted line, take some time to work out whether this really will be the best deal for you - it may be cheaper to get finance elsewhe...

Click here to read more from InterCars.co.uk