Car finance, unlike credit cards and personal loans, doesn’t boast a mass of online comparison websites facilitating a quick and easy comparison of all potential options. With this in mind how do you find the best car finance deals and is there an alternative to undertaking a mass of pre-purchase leg work?
Going back a couple of years you could have put a pretty safe bet on high street banks offering the best rates for such as purchase, however, with banks unwilling to lend to the numbers they once did it’s no longer a dead cert.
Over recent years the average households disposable income has dropped drastically, now sitting at an all-time low, the need to compare car finance offerings from a selection of lenders in order to be sure of the best deal is greater than ever. Here, we have listed three ways in which you can achieve this comparison.
Option 1. Self comparison
The first and most time-consuming option is to carry out your own comparison, after all who needs comparison sites? The existence of many thousands of lenders each offering dozens of car finance deals means you should be prepared for a mass of leg work although with hundreds of pounds in interest fees at stake it’s probably worth your while.
Most lenders have finance calculators on their websites which make the process a whole load easier, the calculators enable you to enter an amount you’d like to borrow along with a deposit and desired term. Some even allow you to specify whether you have very poor, poor, average, good or excellent credit which results in a more accurate representation of the potential costs and repayments.
Although you will never know the exact rate you will receive until you make an application carrying out your own comparison will give you a good indication, you should also look out for any additional charges or admin fees that might apply on some car finance deals.
Option 2. Finance broker
Perhaps the best option, especially if you have a considerable drain on your time, is to use a car finance broker. Comparing car finance deals on your behalf, some such as Stoneacre are also able to help you source a suitable car. A decent broker won’t charge you a penny for their services and instead make their money through an introduction fee that’s paid by the finance company upon you taking their finance offering.
Brokers have the ability to quickly and easily compare criteria and rates form many lenders and may even have access to preferential rates based on the volume of introductions they make, you can submit an application with a broker without any obligation to proceed, so, if the rates are not right you can simply walk away.
A downside to using a broker is the likelihood of multiple credit checks being carried out with different lenders, although in order to avoid this some brokers make use of innovative risk navigation technology which can be used to assess an indivduals suitability for credit without leaving a footprint on their credit file. Before choosing a broker, you would be wise to ask if they are one of the select few making use of such technology.
Option 3. Financial advisor
A less popular option would be to enlist the services of a financial advisor who will be able to look at how much you can afford to pay and then sift through dozens and dozens of car finance deals with the aim of hunting down the deal that makes best financial sense.
Of course as some of us will already know, enlisting the services of a financial advisor can be costly and certainly won’t be the best option for everyone, but given the amount of interest at stake it can prove to be a financially viable option.
Option 4. Don’t take finance
The final option on our list doesn’t actually require any comparison at all, it’s an alternative to finance altogether. Rather than spending many hundreds of pounds on interest alone, why not simply save for a car then make a cash purchase?
This option is probably more sensible for those with a bad credit score as the interest charges can easily run into the thousands of pounds. Although if you find yourself in such a position and are insistant on opting for finance, there are many things you can and probably should do beforehand in order to improve your credit score. Following the tips outlined in ’6 tips for improving a bad credit score’ which was recently published by Motor Paper should provide a good base on which to start. Granted it’s not simply an over night job, but it could save you heaps of cash in the long run.
Joe is a passionate car enthusiast and motoring Journalist. Covering a range of topics form model launches to car ownership and finance, Joe is usually found behind the wheel of a white Ford Fiesta ST.