Cars are getting more expensive as inflation rises and interest rates do too – though you can get on the road for less by following a few tried and true tips. We’ve put together some of the best advice for getting a great deal on car finance for 2022.
Set your budget first
This is the first priority when looking for new cars – and finance. It’s the first question your broker will ask: how much do you need? It may depend on what you can afford. Using a car loan calculator, you can do a quick “at a glance” estimate at how much you can pay each month in repayments. Remember to add insurance, fuel, and maintenance on top.
When you create a budget, you may select what you’ll do with the car. Do you have any quick commutes? Big country holidays? Is a baby (or a sibling for the infant) on the way? When the time comes to shop, all of this information should assist you in narrowing down your search. At this point, you may also want to check your credit score. This comes in handy later.
Buying new vs. used – which is really “cheaper?”
Buying new has a higher upfront price – but used cars have higher later-on costs. With so many used automobiles available, you probably won’t have to worry about depreciation when you locate one that meets all of your needs and wants – after a lot of tire kicking and due diligence. That said, spare parts may be harder to source, and maintenance costs will accumulate as more components wear out. New cars are more reliable, have modern materials and safety features and best of all, brokers and lenders will pass on lower interest rates to reflect the lower risk – especially since you’re covered by a manufacturer warranty, too.
Sorting your finances next
If you want to get the best deal on your car, it’s worth going through the motions of applying for your finance beforehand. This is known as in-principle or car loan preapproval. You get about a month or two to find a car and the loan is only activated once you buy your vehicle. It’s also a way to learn if you can get a car loan with bad credit. If you have bad credit, it’s not the end of the world. You can still get approved, though you may have to settle for higher-than-average interest rates. There are some ways around some of the nastier parts of bad credit car loans, which we’ve touched on here.
Tips for getting a good car deal
Timing is crucial. Before the conclusion of the fiscal year and around Christmas, the majority of automobiles are sold. Why? because retailers are eager to close deals.
Approach dealers at the end of the month if you are unable to wait. This is due to the fact that dealers desire to increase their sales in order to hit quota or receive additional bonuses.
Making an extra repayment per year
To reduce your overall interest, consider switching to twice monthly or fortnightly payments. This gives you “13” monthly repayments, which over a five-year loan means ending your loan five months early with no added cost.