Buying a new car is exciting but stressful too. Many of you generally have your cars financed, and this is why it becomes crucial to see if you are getting a better deal. Of course, it will cost you more than the value of your car because of the interest payments.
Further, it depends on the type of financing. For instance, a personal contract purchase will be more expensive than an auto loan. However, if you have borrowed money despite your poor credit rating, the loan will be slightly expensive.
Although car finance in Ireland for bad credit people is available, it carries slightly higher interest rates. However, it is not just the financing deal or your credit rating you need to bear in mind while buying a car. There are a lot of factors that you need to consider to make more bangs for your bucks.
Analyse your affordability
Before you go to the showroom, the first thing you need to do is to be sure about your affordability. Be honest about how much you can pay for your car. Since you are about to finance your car, you will have to check your affordability in terms of the total cost of the loan. Note that it will be more than the worth of your car.
So do not make your calculations just based on the value of your car. How much it will cost you depends on the term of your car loan. If you choose a longer repayment length, it can enable you to have smaller monthly payments, but you will end up paying more than what you owe.
Moreover, your down payment also plays a paramount role. The larger the down payment, the smaller the loan will be. As a result, you can make the most of your auto loan.
Have a good credit score
There is no denying that you need to have a good credit score to get an auto loan at lower interest rates. Although there are a few lenders who accept applications from bad credit borrowers, it does not mean that you can ignore the importance of having a good credit score.
Before you buy a car, make sure that your credit report is accurate. You can get a free copy of your credit file from credit reference agencies once a year. You can look if all of your personal details are up to date.
If you have found any discrepancy or default that you do not recognise, you should immediately report it to the credit bureau. It can take a couple of days to mend it. If your credit score is poor, make sure that you pay off all of your current debts and not rack your credit card bills.
Note that each lender charges different interest rates. You should shop around to make sure that you get the deal that suits best your budget. A rule of thumb says that you can get a better deal if you have a good credit score.
However, you will still find that few lenders are offering auto loans at higher interest rates. This is because of additional costs like processing fees, upfront cost, and the like. Try to use the online loan calculator to see how much it does cost you.
Do not forget to take into account the early repayment charge and late payment fees. Consider other factors like unexpected expenses to find out if you will manage the debt payment.
New car or used car
To get more bang for your bucks, you should analyse whether you should buy a used car or a new car. It depends on your budget and affordability. Some people prefer to buy a second-hand car because that can save a lot of money.
When it comes to buying a second-hand car, it does not mean that you have to buy a model that is five years old. You can still buy a fairly new car. Even if it is just a year old, you can save a lot of money.
However, it is crucial to confirm that the car is in good condition. If you are buying a second-hand car that is just a year old, you can negotiate for a good price, and as a result, you will not be able to borrow a large amount of money. It does not mean that you cannot buy a new car, but you need to be sure about your affordability.
To get bang for your bucks while buying a car, you need to check your affordability. Find out how much you can pay. Shop around to get a better deal and have a good credit score. If it seems very expensive to finance a new car, you should try to buy a used car.