At some point all car owners have to think about upgrading their vehicle. It might be once every 15 years or it could be every 12 months – everyone’s needs and circumstances are different – but at some point an alternative or newer car will be required.
For those paying with cash, this won’t be a problem and they will often be able to walk into a dealership, pick the car they want and pay for it in full with cash. Unfortunately, this isn’t the case for 80% of people who buy their new cars using car finance. Their issues are that they have to opt for a car that’s affordable whilst being practical and suited to their needs. They should shop with the mantra of finding a car that fulfils their needs and not only their wants (ie; look and fell). As we all know, the price of a new vehicle is always expensive – it is sometimes the second biggest purchase that people make in their lives. Therefore, if you’re looking to obtain (not necessarily buy) a new car and want to reduce the amount of money you spend on the finance for that car each month, you should consider the following five simple steps.
1. Consider car leasing (contract hire for a business or personal contract hire for an individual). You need to ask yourself, do you really need to own the car? Is it an absolute necessity that you have your name on the log book? Is owning the car a ‘need’ or a ‘want’. If ownership is just a ‘want’ then you should be aware that leasing a car is as much as 60% less per month than buying it with a loan. This is now being recognised by many consumers and for the first 6 month’s of this year 57% of all car finance provided by dealers were via leasing contracts.
In addition to cost savings per month, the advantages of leasing allows people and businesses to obtain a new vehicle every two to five years without needing to pay for the cars in full, as they simply make a monthly payment. At the end of the period there is sometimes an option to buy the car and if you don’t want to buy it you simply return it and get a new one (no need to fuss around with a part exchange or sale). The additional benefits of leasing for a business is that a contract hire agreement can allow a business to avoid as much as 100% of VAT.
2. Negotiate on price – It is a known fact that most people do not enjoy negotiating with a dealer when it comes time to buy a new car. In fact, a recent survey suggests that 45% of British people don’t negotiate on car price at all. If the car isn’t already marked as a ‘special’ then it is likely that the dealer has some scope to negotiate and you should always make a lower offer.
3. Shop Around Based on Monthly Payment – 90% of all car buyers use the internet to research the car that they want and to find out what might be the best price. Once they have this information, they typically approach a dealer within 5 miles and see what is the best price that they might get on the actual cost of the entire car. If you are a buyer that is likely to use finance, then you should be shopping based on a monthly payment and total payment across the finance contract period.