If you’re in the market for your next car, you may be considering car finance as a way to fund your purchase. Car finance can help you spread the cost of your next car and can usually get you a better car then you would with cash alone. However, you may be looking for a cheap car finance deal if your budget is limited. The below tips can be considered to help get you a cheaper car finance deal but at the end of the day, the deal you are offered will always be the lender’s decision. 

Improve your credit score. 

In general, a better credit score will get you better car finance. There’s nothing to say having a less than perfect credit score means you can’t get approved for a finance deal, but it can make it harder. With a low score, you may not get offered the most competitive rates or you may have fewer lending opportunities. So, to help get you a cheaper car finance deal, you should start with your credit score. Check your credit score for free with one of the credit referencing agencies (Equifax, Experian or TransUnion) then, if your score needs work, try and fix what you can before you make an application for car finance. Things like making payments on time, reducing the amount of debt you have, keeping credit usage low, and having a healthy mix of credit can all help to better your credit score. 

Put down a bigger deposit. 

A car finance deposit is a great way to reduce your monthly payments or shorten the loan term. When you put in a deposit at the start of the deal, you are reducing the overall loan amount. A smaller loan can be split into smaller monthly payments or you can choose a shorter term to pay the finance off faster. Car finance deposits are usually non-refundable though as they are used to bring the loan down. However, increasing your deposit can be a great way to get a cheaper car finance deal for your budget. 

Find low APR deals. 

Interest rates and car finance kind of go hand in hand. Unless you manage to secure a 0% car finance deal on which you’ll pay no interest, you will usually have to pay some sort of interest on your loan. A higher APR rate means you’ll pay back more money over the course of your deal. So, searching around for the cheapest car finance providers with the lowest interest rate can help you to make your deal cheaper. You can also save on interest rates when you improve your credit score and are in a better credit position when applying for finance. 

Compare both new and used models. 

When you think of cheap car finance deals, you’ll probably think of buying a used car on finance, and in many cases, this can be true. However, it can still be worth checking out both new and used cars. Like we’ve mentioned above, low interest rates are key to cheaper car finance and usually only 0% interest rate deals are offered on brand new cars. Brand new cars can also offer low monthly payments on a PCP deal, which is a form of finance that offers low payments with a large balloon payment. Using a personal loan or hire purchase deal where the payments are split equally over the tern, can usually make used cars cheaper than brand new ones. Be sure to explore all finance options to ensure you’re getting the right deal. 

Apply for a personal loan. 

One of the cheapest ways to finance a car is through a personal loan. Personal loans aren’t secured which means you’ll own the car from the start of the agreement and there’s no collateral involved if you fail to pay. Persona loans can offer some of the lowest interest rates around so they can be a great way to finance a car. A personal loan can actually be used for a number of purposes. You apply for how much you want, and how long you want to pay it back over and if approved, the lender deposits the full loan into your bank account. You can then buy a car just like a cash buyer! 

Part exchange your car. 

Get money off your next car finance deal by using your current car as a part exchange. If you already have a car, you can use the value of the part-exchange towards your car finance deposit. The dealer will give you a valuation price for your current car and it will come off your car finance loan amount. It also makes it easier to get rid of your old car when picking up your new car from the dealer. However, if you’re not happy with the valuation from the dealer, you can sell the car privately and use any money you get from the sale towards your new car.