If you can’t afford a new car, you’re not alone. In fact, research shows that eight out of every ten cars are purchased using finance – even used cars. However, if you are looking for credit to purchase a new vehicle, there are a number of factors to consider. You will want to choose a lender that offers the best rates of interest, as well as flexible repayment terms. Here are some tips on how to make cars affordable on finance.
1. APR and interest
When applying for finance for a car, you will need to check the APR – or Annual Percentage Rate. This tells you much interest you will be paying on the loan every year (including any additional fees). The lower the APR, the less you will have to pay back every year. You will need to make repayments every month, and the lender will tell you how to do this. For example, payments will be taken automatically from your bank account via Direct Debit. Use a price comparison website to find the cheapest rates of interest for car finance. Although these are only a guide, they can give you a good indication about how much the car will cost you on credit. However, contact a member of staff from the lender to obtain a full quote.
2. Car finance and deposits
When applying for a car on finance, you will need to decide on the type of credit that you are going to apply for. For example, a personal loan will allow you to make monthly repayments on the item, and then keep the vehicle once you have made your final payment. You also won’t have to put down a deposit on a personal loan like you would do with a lease deal or dealer finance. However, interest rates might be higher on a personal loan – costing you more money in the long run. Decide on what type of finance is best in your circumstances.