Wondering what to look for in a finance package? Well, here are cartime Tim’s tips for buying cars on finance!
Financing a used car can be confusing, but everyone’s favourite car fanatic is back with some brilliant tips for buying cars on finance. Yes, buying a used car will save you money but if you’re planning to opt for a finance package then you need to be clued up about it, to really see that saving go the extra mile.
Tim’s tips – before you shop: know your credit score
But where to start? Before you even begin shopping for a used car, it’s best to understand your credit score. Car finance is often readily available even to those with a poor credit rating, but if yours is on the shaky side you might not qualify for the best rates, such as 0% finance. Knowing your score before you shop will prepare you for what to expect, and help you to figure out what kind of car loan rates that you’ll qualify for.
Most credit scores operate within a range of 301-850. Lenders have their own definition of what constitutes as ‘good’. In general, scores fall into the following categories:
- Bad credit: Under 600
- Poor credit: From 600 to 649 (inclusive)
- Fair credit: From 650 to 699
- Good credit: From 700 to 749
- Excellent credit: 750 and above
Once you know your credit score you can begin shopping for your dream used car!
Tim’s tips – after you shop
Once you’re finished shopping, the fun part doesn’t have to be over – and it won’t if you stick to the following tips for buying cars on finance. Now you’ve found a car, remember to…
Keep the term as short as you can!
The ‘term’ is the duration of your agreement (read more on cartime Tim’s Finance Glossary!) Although shorter terms come with higher monthly payments, the interest rates on shorts loan are a lot lower.
It may be tempting to stretch out a car loan for five or six years and watch the monthly payments fall, but this will mean that you pay much more in interest over the duration. Keeping the term as short as you can afford will actually save you money in the long run.
Put the biggest possible deposit down
Again, this might sting when you’re first buying the car, but it will save you money. For buyers with good credit, you might not even have to put a deposit down. This may be tempting, but it can be risky, as if you suddenly needed to sell your car you might not be able to if you owe more than the car’s worth. A larger down payment will ensure this situation never happens.
Pay for any extras with cash!
When buying a used car, it’s important to factor in the extra expenses, like tax, registration costs, documentation costs and any added extras such as warranties. Although it’s an option to group these with your finance package, it can make you upside down on your car loan – where you owe more than the car is worth.
If you can, pay for any of your added extras outright. If you can’t, pay for as much as you can, because it’ll cost you less in the future.
Finding your perfect used car is a fantastic feeling. Remembering these tips for buying cars on finance will help you find the perfect way to fund it too. If you need any help or more information, our team can point you in the right direction with friendly, impartial advice. Contact cartime today and we’ll help you on the right track, with our new way to buy a used car.