With the cost of living soaring and interest rates only climbing higher, you may be wondering if you can afford that much needed car when every pound needs to stretch further and further. If you’re a bit miffed about buying a car – or perhaps you’ve never had to buy one yourself before – we have a lot of practical advice about buying your car in 2023 so you can make sure your new motor is a sound and trouble-free purchase.
Have you checked your credit?
You could worry that your credit is awful, but how bad is it really? Anything below the halfway point is typically labelled as “below average,” but that shouldn’t stop you from reviewing your credit score and history for free, so you know where you stand before you shop around. A lower credit score can make life difficult when it comes to getting a car loan, but it doesn’t mean you’re at a dead end. You can make a case for approval by saving up for a deposit or paying down debts so your credit score rises.
What’s your budget?
Of course, you need to have a budget in mind before you go and look at cars either online or in person. How much can you afford each month in repayments? What about fuel and servicing costs? Factor all this into your sums. Look for cars and vehicles in with your “must have” items such as storage space, fuel economy (or performance!), satnav, and the like. If you don’t have great credit, it can also go a long way to show lenders you’re a responsible borrower. No matter what your budget may be, there’s a high possibility that you’ll be able to find a vehicle that suits your needs. There are many cars for under £10,000 and even cars for less than £5,000, though they may be pre-owned and a little older.
You can choose between using savings, taking out a loan or getting a car on finance – each has their advantages and drawbacks, so weigh up the pros and cons before you make a decision. Using your savings will limit you to a specific sum, whereas taking out a loan will provide you with more flexibility. You will have to pay interest on a loan, but you will own the car once your repayments have been made in full. Financing will likely have slightly lower monthly payments compared to a loan, but you won’t own the car at the end of your contract. Think about your financial situation and choose an option that best suits your unique needs.
Getting approved for finance
Unless you have stacks of cash lying around, the most economical way to buy a car is to get approved for car finance. If you have a budget in mind, you should consider getting finance pre-approval. This means the hard part is out of the way – the application process – and you have about a month to find your car and “pull the trigger” on the loan. The best part is that it gives you a price ceiling so dealers and sellers will have to match or better your spending limit or you’ll walk away.
Tips to get a better deal
Dealers’ livelihoods depend on sales. They loathe letting a sale slip past – especially if they are struggling to make quota at the end of the month. This is when you should approach dealers; they are usually more open to bargaining at the ends of the month (or even better, at the end of the year.) Coupled with your price ceiling, you’ll have to stand firm as the dealer does their song and dance (the old “I’ll see what my boss says” routine for one) to let their car go at a “painful” price. Taking a showroom model can also save you a bit of coin, as dealers are usually desperate to get them out the door since they’ve already paid for them. Remember, you always have the power!