Car Finance – Setting your Sights and your Budget

So you’ve decided to get a car on finance – good choice. But now comes the difficult task of working a new car into your budget. The temptation to spend that bit extra is huge, you always want bigger and faster. But before you sign away half of your salary it’s important to be aware of how these costs are calculated. Here are some things to bear in mind and tips for getting the best deal.

Area:
Your postcode is used to determine both tax and car finance rate, along with car or van insurance – rural and low crime areas are cheaper.

Trade-in:
Shop around before you include your current car as part of your finance package, you may be able to get a better deal.

Duration:
Your total loan term has a significant effect on your total repayments. While a longer term may reduce your monthly outgoings, the cumulative total after interest will be much higher.

Upfront Payment:
A cash down payment will also bring your monthly payments down and a 20% payment will typically cover the first years’ depreciation and ensure you never owe more than your car is worth.

Other Things Worth Thinking about:
Fuel economy – calculate your average costs and factor over three or five years this the mpg of your can save you a pretty penny. Reliability – again, if your deal is long term, the reliability of the manufacturer will become increasingly important as your car gets older, be sure to ask around and read reviews.

Finally Car Finance, remember that your car should be something that you enjoy, not a source of stress. A little bit of number crunching now could save you hundreds in the long term and keep you from worrying about making repayments.