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Five tips to get the best car-finance deal

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Examine your options before making a decision on car finance (pic: Deposit Photos)

Examine your options before making a decision on car finance (pic: Deposit Photos)

Examine your options before making a decision on car finance (pic: Deposit Photos)

Buying a car can be a daunting task and even the most level-headed among us let common sense fly out of the window. Apart from buying a home and securing a mortgage, financing a new car will be the second largest purchase many people will face. To get the best deal you need to shop around for the right finance option as well as the right car. Here are a few pointers to help you on your way.

Haggle: Don't be afraid to haggle before making any car purchase and agreeing on a finance deal. Obviously, the more money you are spending on the car, the greater the scope for manoeuvring, but regardless of the price it is always worth trying to negotiate. If you can't get secure a discount then don't underestimate the value of some optional extras instead.

Know your finance options: Finance has never been cheaper, but to get the best deal do shop around. There are a range of options, including personal loans, hire purchase (HP) and personal contract purchase (PCP). Loans are offered by banks, building societies and credit card organisations, so compare interest rates, terms and conditions. With HP you repay, by instalments, the total cost of the car, plus interest. At the end of the contract the car is yours. In contrast, a PCP has lower monthly repayments because you are not paying off the full value of the car. At the end of the contract you have the option of returning the keys, buying the car outright or negotiating another PCP.

 

Take the long view: When it comes to buying always negotiate the total cost rather than a monthly repayment. Often monthly or weekly repayments can conceal an expensive deal. Also you'll need to factor in running costs, insurance cover, warranties and breakdown cover - so don't overstretch yourself and ask the dealer about any hidden fees or costs.

Do the maths: Compare loans and finance by APR - this essentially is the real cost of borrowing money because it includes interest and charges. The lower the APR, the better the finance deal. Remember, a longer repayment period reduces the monthly payment, but it will also drive up your total cost. Negotiate for the highest monthly payment you can comfortably afford as higher monthly payment will get you out of debt faster.

Know when to buy: Sometimes getting a good deal simply depends on the time of the year you are buying. Convertibles tend to be more expensive during the summer months but it's a great time to get a bargain 4x4. This time of the year is the very best time to secure a good deal on a new car, as this period is just before the new 15 registration plates and it is also the quietest time in dealerships. (check out our guide to the best deals and discounts around the country on page 3)

Finally and most importantly always be willing to walk away. Remember, you really are in the driving seat.

Sunday Independent