5 ways to save money on your car finance

Buy a used or nearly new car

One of the easiest ways to save money on your car finance is to choose a nearly new or used car rather than one straight off the production line. While all cars depreciate over time, they lose most of their value in the first year. So, when you choose a car that’s at least a year old, you can save on the purchase price and miss out on the most severe drop in value. If you’re looking for a good value model with low mileage and the latest tech, consider nearly new. These cars are usually less than three years old and purchased by dealerships to be part of their demo fleet or ‘pre-registered’ stock. They’re typically high spec and will only have a few thousand miles on the clock.

Use a car finance broker

There are many advantages of using a car finance broker like us. Perhaps the biggest is that you get access to several lenders with just one application. At CarFinance 247, we’ll always look to find you the best deal from our panel of lenders. You’ll also be paired with a dedicated account manager to help guide you through the process and answer any questions you have. They can help you find a car, negotiate with the dealership, and sort out all the paperwork. A finance broker could also work for you if you have a poor credit history, are self-employed, or are looking to refinance as having access to a panel of lenders mean they can find loans for people with a range of circumstances.

Consider refinancing

If you already own a car on finance, you might be able to find a better deal by refinancing. You don’t have to wait until you reach the end of your agreement to look for a new loan; when you refinance, you’ll settle your existing deal and find a new one. This is particularly useful if your financial circumstances have changed. Maybe your credit score has improved, and you could now qualify for a better rate, or perhaps you’ve had a pay rise, so you want to find a loan with a shorter term and higher repayments to pay less interest overall.

Put down a larger deposit

While we don’t all have savings to use as a deposit or a car to part-exchange – and no deposit options are available – the more you can put down upfront, the less you’ll need to borrow to buy a car. This could mean you’ll have lower monthly repayments or can choose a shorter loan term. If you can pay back your car loan faster, you’ll save money on your finance overall as you’ll pay less interest over time. Having a large deposit could also help you secure car finance if you have a bad credit score as borrowing a smaller amount poses less risk to lenders.

Improve your credit rating

While other factors can influence the rate offered, including your employment circumstances, the car you want to buy, and how much you need to borrow, your credit score is important. A good rule of thumb is the higher your credit score, the better the rate you’ll be offered for car finance. But the good news is, no matter your credit history, you can take steps to improve your score over time. Making sure you don’t miss payments, registering on the electoral roll, and trying not to make too many applications for credit in a short time are all positive actions you can take that could boost your score.