Getting a car on finance can be hard, with so many providers how do you know where to buy from and who to trust? Whether you’re looking for 0 Deposit Car Finance or to refinance your car then these top tips will ensure you secure the best possible deal.
Know your worth
Before you jump in you need to know what sort of deal you could get. Work out your affordability to know what sort of monthly repayments you’re comfortable with and check your credit score to know how to finance providers will view you. Typically, most companies will require a minimum income of £1,000 per month, and the best deals require high affordability (available funds after you’re bills go out) coupled with a strong credit profile.
If you have just missed a payment, have had a default in the past 6 months, or have entered into an IVA agreement, the best deals will be out of reach. If this sounds like you then going down to the bank or straight into a dealership may not be your best choice. There are many specialist brokers and lenders that have car finance packages for poorer credit scores and lower affordability, but the APR may be a bit higher to compensate. If it’s too high for you, you could always wait until your situation improves somewhat, but if getting a car on finance is still a priority then it is certainly possible.
Check the company’s APR
Every finance provider should state their Annual Representative Percentage Rate on their website. Typically, the lower the number the better the deal. However, you want to double-check that this number isn’t artificially lowered by huge deposits.
Don’t confuse “rates from” with “representative APR”. Rates from means this is the best deal they can provide. If you meet all the criteria for the finance package then you could get that rate.
Representative APR instead means that at least 51% of customers received a rate that was the same as or better than the advertised representative APR. Therefore, if a company states their Rep APR is 25% that means 51% of people got a finance package where the APR was between 0-25%. It also means 49% of customers that took out finance with the company did not get better than 26%.
Used Vs New
Another thing to consider is whether you want a brand-new car or a used one. Brand new cars are the goal for many of us, the idea that no one has ever driven the car before, not to mention that new car smell. That said, this luxury comes with a premium in the form of a price tag. Many dealerships do offer some great deals, however, so make sure to shop around.
If new is not for you, a used car can be a much more cost-effective solution. Used cars depreciate far slower meaning your return on investment when you come to sell is much better. There are car finance brokers out there that help you get finance for a used car so never feel like you need to take up the garages offer either.
Make some background checks
Before you commit to driving down to a dealership or applying online with a broker, you want to ensure they’re a reputable company. Every finance provider must be registered with the Financial Conduct Authority and should have their FCA number displayed on their website, it’s usually within their footer. You can check the FCA register to be sure.
As well as legal requirements it is always wise to check out reviews on Google, Trust Pilot, and Reviews.co.uk to ensure other customers have had a good experience. You’ll be surprised at how some of the big names have terrible reputations with real customers, and how some smaller companies can excel in this department.
Avoid scammers and liars
It can be difficult to know who is telling the truth and who is out to scam you, that is why the FCA register is so important, and these companies are regulated and stopped from trading should they break rules. That said some companies can still mislead you to get your business. For example, “We can finance anyone”, “If we can’t finance you nobody can”, and our personal favourite “Guaranteed car finance”.
Not everyone can get finance, nor should they be able to. For example, if someone is bankrupt, they’re not legally allowed to take out credit. If someone is under the age of 18 they also can’t take out credit. It would be irresponsible to lend out money to everyone. Not everyone can afford to make the repayments and finance companies have a moral responsibility to ensure that everyone they set up for finance is able to afford it. So, if you come across a company promising that everyone can get finance, then run a mile.
Let’s face it we all know the stories about the dodgy dealership up the road that takes your money then drops off the face of the Earth. That’s why it can be vital to choose a company that provides some form of aftercare. Is there a warranty in place? Do they provide services? Buying a car, especially a used one can always come with some form of risk. Cars can break down with no sign of trouble and if something happens you want to ensure that the company you used will answer the phone and take care of it.
So, there we have it, some of our top tips for ensuring you can trust your new car finance provider. Although the industry might not have the best reputation, there are some really quality companies out there ready to help you, just do your research first.