No matter what you’re purchasing, getting a good deal is always at the top of the priority list. You want to ensure you’re getting your money’s worth when searching for the best deal.
This is especially true when we’re dealing with big-ticket items like cars. These are big-ticket items, so minimizing cost is a necessity.
That’s why we’ll be looking into car financing options and how you can ensure that you get the best deal possible.
Table of Contents
Car financing options
Hire purchase
A hire purchase is where you pay monthly installments on a car until it is paid off. The car is yours ultimately, but you are technically only hiring it until these payments are complete. The same can be done when you need tires; an easy process of financing wheels will ensure you can afford what you need when you can’t pay all at once.
These payments are typically a fixed monthly amount, so you know exactly what you’re paying each time. Even though the finance company is technically the car’s owner until the final payment is made, you still need to make sure you cover extra costs such as insurance.Â
Personal contract purchase
A personal contract purchase is similar to a hire purchase, but a lump sum is to be paid at the end. You are usually in a contract that lasts three or five years, and at the end of that time frame, you can decide whether to keep the car.
This is the most popular way to finance a car, but there can be strict terms on the mileage you’re allowed to do. This way of car financing differs massively between companies and car types, so ensure you’re looking at all of the terms in great detail before accepting.
Car subscriptions
The newest and most flexible option is a car subscription. Not every brand offers it currently, but that could change in the next few years. You can start these subscriptions in as little as a month, making it flexible.
Just bear in mind that this is the most expensive car financing option, so it wouldn’t be ideal for the long term. But it is useful if you need a car to tide you over or if you’re testing out a new vehicle.
Best negotiating tactics to use
Walk out method
This might seem like a dramatic way to get a good car financing deal, but it does work. If you are not getting anywhere with your negotiation, simply walking out of the door could make the car dealer give you what you’re looking for.
Don’t be afraid to haggle
This is where doing your research can come in handy as it will allow you to haggle the price down. If you know what the market looks like and have prior knowledge of APR rates, you will ensure no one can take advantage of you. You can always try and negotiate over deposit contributions as well. Depending on which car you want and what specs/packs you want added onto it, it is important to remember that car dealerships add discount onto your order and it is up to them what discount you get.
Take your time
Never feel pressured into signing anything you’re not comfortable with. A good salesperson will give you as much time as you need to make a decision. If they’re trying to pressure you, it might not be the deal you think it is. Always make sure you read the terms and conditions beforehand as well.
Final thoughts
Cross-check the rates available
When you’re looking into payment plans, it’s best to ensure you know the different APR rates. This will tell you how much you’re going to need to pay back each year. The amount will differ depending on how many years the loan is spread across so keep this in mind too.
Plan for the long term
You might find a payment plan that suits you right now but make sure you’re planning for the future. You don’t want to be caught short if you have a change in circumstance. There might be charges for changing your payment terms later down the road so makes sure you’re making a measured decision.
Car financing is a great way to minimize the cost of a car. Doing your research beforehand ensures you can negotiate effectively and get what you’re looking for.
