For drivers in the UK, there are now more ways than ever to buy a car! For a long time, the only way to purchase a vehicle was with cash, but with the cost of cars becoming more expensive, more drivers are relying on finance or some sort of lease to help spread the cost of owning a car. If you’re wondering the best and cheapest way to get a car, it can be worth exploring factors that affect the buying process and the different ways to buy, which is exactly what we look at below.
Buying a Car With Cash
Technically, the cheapest way to buy a car is with cash, but it can depend on your personal situation. When you pay for a car with cash, you make a one-off lump sum payment. Buying with cash means you will be the car’s legal owner, and you have the freedom to buy your car from anywhere, such as a private seller or dealership. Buying with cash can be the most cost-effective because, unlike car finance, there’s no interest to pay on top of your payment. The cost of both new and used cars has increased in recent years, and whilst cash can be the best way to get a car, for many drivers, it’s not realistic due to their high purchase price.
Choose a Used Car
Used cars are a great choice for any driver on a budget! Second-hand cars are cheaper to buy than brand-new cars, and spreading the cost with finance can help keep monthly payments low. If you do some research first, buying a used car can be a great choice! Its recommended you use a reputable dealership when buying a used car and check out any reviews of the dealer before you commit to buying. You can also find out information about the car’s history by doing an online check to see if it has an up-to-date MOT and the results of its previous MOTs. This helps to give you a better idea of the car’s condition and its previous owners.
Research Running Costs And Insurance Rates
You could get the best deal in the world on a used car, but it’s no good if the cost to own and run the car is leaving you out of pocket. Many drivers forget to budget the cost of running a car into their monthly budget too. You will need to consider the cost to refuel your petrol or diesel car or recharge your electric car, and depending on how often and how far you drive, this may be high. You will also need to have a valid Vehicle Exercise Duty (car tax) in place for your vehicle, and costs can differ depending on the type of car you choose. Your vehicle will need to be insured, and rates will vary based on the type of vehicle you choose but also your personal circumstances. If you want to keep costs low, it can be worth finding a car that is fuel efficient, cheap to run and in a low insurance group.
Calculate Finance Rates First
If you’re looking to get a car on finance, it can be worth calculating your loan first before you even apply. You can use a HP car finance calculator for free to explore hire purchase deals and compare monthly payments. Based on your loan term and credit score, you can get an idea of how much you can borrow towards a car purchase. Usually, expanding the loan term length can help to reduce monthly payments, but it can mean you spend longer paying interest, which may not make your finance deal the most cost-effective and end up being more expensive in the long run.
Increase Your Credit Score For Car Finance
Finance lenders will perform a credit check on you when you apply for finance. Credit scores are important to finance as lenders can make predictions about how you’ll handle your credit based on your previous history of borrowing. Lenders favor applicants who have a good credit score due to a long history of handling credit correctly. Making payments on time and in full, paying down credit usage and having a healthy mix of credit accounts can show lenders you’re a responsible borrower. It can help to increase your credit score before applying for finance to help get a better deal.
Choose PCP For Low Monthly Payments
If hire purchase finance doesn’t feel like the right finance agreement for your situation and you solely want to focus on car finance low monthly payments, it can be worth exploring PCP car finance deals. Personal Contract Purchase can offer low monthly payments to drivers, even on brand new cars. This is due to the structure of PCP, which instead of spreading the value of the loan into equal payment like hire purchase, you instead leave much of the loan until a final balloon payment. PCP deals are suitable for drivers who like to change their car more regularly, who aren’t precious about owning the car at the end of the deal and want smaller monthly payments.
