The end of the year, the rapidly approaching plate-change time and the distinct possibility of interest rate hikes in the near future, many observers feel that this is the perfect time to buy a new car.
Their reasoning is that post-Brexit cars and parts are likely to experience a slowdown in delivery and the low cost of financing, coupled with the need for dealers to end the year as strongly as possible result in significant savings for buyers.
Once you have made the decision to buy a new car, the next task is figuring out how you are going to pay for it.
It is important to note that cost of buying a car is far greater than just the price. Using a car costs calculator can help you make the best decision for your particular situation.
Purchasing your car for cash is by far the best option and will result in the greatest savings. You avoid any finance charges and many dealers will offer further incentives for cash buyers. Even if paying the full purchase price in cash is not possible, making the largest possible cash deposit will yield decent savings. Some lenders will also offer lower interest rates if the initial cash deposit is larger.
One rule of thumb to keep in mind; emergencies do happen so avoid deleting your savings to the extent that any emergency puts you in a bind.
Cash buyers should consider using their credit card for paying for part of the car. Putting as little as £100 on the card can give you the benefits of card purchase protection.
Financing the Vehicle
While buying a car for cash is the best method, for most people this simply is not an available option.
Car buyers have a lot of financing options and while many may look attractive, they may not actually be the best value. Investing the time to shop around for the best rate and also calculating how much you will pay in interest over the course of the loan will help you select the best option.
For those with an excellent credit rating, a personal loan is usually the best option. The interest rate is generally very attractive, monthly payments are typically low, and you have a great deal of flexibility. Personal loans usually have a length of one to seven years.
It is important to remember that the longer the loan period the lower the monthly payment. Pick the shortest time period possible. A low monthly payment may look attractive, but over the course of few years you may actually pay thousands and addition pounds than if you had chosen a shorter time period.
If a personal loan is not an option, there are a number of other loan sources that merit comparison.
Here are some points to consider when applying for a new car loan.
- Make sure the monthly payments fit your budget. Don’t count such items as anticipated salary increases or bonuses in your calculations.
- Make sure you understand all of the fees associated with the loan.
- Carefully evaluate any insurance options offered such as payment protection insurance.
- Make sure there are no penalties for early payment.
For many years, used cars have outsold new cars in the UK. As stated at the top, many analysts consider this the perfect time to make a new car purchase. Taking a bit of time to research not only the vehicle, but also the financing options, can result in significant savings.