AROUND 90% of new cars are bought with car financing and an increasing number of used cars too.
Car buyers rarely have the necessary amount of cash lying around to buy a car, especially in these difficult times financial time.
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We spoke to a car dealership with its own dealership to ask what people should pay attention to.
He wanted to remain anonymous, but has been in the business for 15 years, from the bottom up.
At the time, he said he financed everything from… Celebrate until Ferraris for people aged 17 to 70.
When asked about car financing, he said, “Your credit is key.”
“People rarely have all the money they need to buy the car right away, so financing is an obvious choice.
“It’s been put on a board by the dealer, but you need to fully understand the deal and if you have bad credit you need to think about it seriously.”
According to online used car marketplace Buy a car“For the average borrower, BuyaCar’s APR is about 9.9%, although other lenders may charge significantly more.
For example, at the time of writing, Zuto offers 10.9% APR for those with an excellent credit score, while some automakers charge as much as 15.9% APR on used cars.
‘People with bad credit can now be offered anything from 29.9% APR to even 49.9%.’
Our dealer continued, “I’ve seen some people take out auto financing with 28% APR because their credit is so bad, which I think is a crazy thing to do.
“If you’re in that situation, the best thing you can do is try to improve your score. If possible, buy a credit card, pay for small things like grocery stores, and make sure you pay everything on time.”
It’s worth remembering that every car dealer’s agreement with their finance company is different, but dealers can earn a very good commission by selling it to you.
The greater the amount you borrow through them, the more they earn.
The dealer continued: “Depending on your score, it may be cheaper to get a personal loan for the car than to use financing from a dealer, but remember this isn’t secured against your car, so they can get your stuff. start decreasing if you can’t pay.
“On cheaper cars, say less than £3,000, it’s probably worth just buying outright — if you can.”
