How to Get the Best Deal When Buying a New or Used Car

Posted by Kevin Pearce in Personal Finance on 11 January 2018 - Kevin is a Senior Credit Analyst at checkmyfile

Buying a new car is both exciting and expensive, but if you know where to look and when, you can grab yourself a bargain. If you take a little time to look into finance or loan deals as well, you can bring down the overall costs significantly.

There’s no secret to getting the best deal on a new or used car, just some carefully-considered preparation and making sure you do your homework well in advance.

Buy at the right time of year for a cheaper car

For some people age is much more than just a number and the difference between a car that’s come out early in the year and later can make a big difference.

Ask yourself this: If you were shopping for a brand new car would you rather pick up something that’s come straight from the factory or an identical car that’s been sat there for up to six months? Even if the cars are the same spec, style, year and colour, most people would rather go for the ‘newer’ new car, which is why you can often get a good discount on the outgoing number plates.

New number plates are released every March and September so the best deals on the outgoing number plates can be had before this time (February/ August). Dealers want to free up space for the newer plates but buyers want something new, so this that’s why you’re more likely to save big around this time. The only real disadvantage of buying an ‘old’ plate against a ‘new’ one is that you may find that your car starts to depreciate in value sooner.

What about used cars?

The same seasonality applies for the used car market; there’s a surge in new car sales when the new plates come out, which means plenty of people want to part ways with their current car, so you’ll find plenty to choose from that’s been part-exchanged at the dealers.

How do MOTs come into it?

Once a car is three years old, it is required by law to pass an annual MOT test to ensure it’s safe for the driver and other road users. Most cars should have no trouble passing their MOT, but for many motorists the extra hassle of taking their car for an MOT once a year is too much to handle and take this opportunity to sell the car.

For this reason a car loses a chunk of its value once its reached MOT age, making it ripe for the second hand market. If you’re happy to buy a car that’s still young but has perhaps lost the ‘new car smell’ these can be a good option- in many cases you’ll be saving money on something which is still available to buy new from the dealerships.

For owners of older vehicles, an upcoming MOT can be a good reason to think about buying a new car, especially if they think any repairs are likely to cost more than the overall value of the car.

Get a great car by waiting for an unpopular time of year

Going against the market trend can also help when it comes to saving money; convertibles sell well in summer because it’s easy to sell a drop top when the weather’s warm. The dealer knows that, so they’re less likely to budge on the price. Buying the same car in winter means you’re more likely to be able to haggle them down to a reasonable price; they’d rather take the hit than risk not finding another customer for several months.

The same reasoning applies to 4x4s, which are in their element during the winter months: they’re less likely to sell during the summer, so there are more bargains to be had then.

Even the day on which you visit the dealership can help - weekdays are generally quieter and the dealer is more likely to be flexible if it means securing the sale in a quiet period. You will also get more of their attention and be able to spend more time digging into the car’s history.

Getting the best finance deal or loan for a car

Getting the price of a car down to a reasonable price is only half the battle. Unless you’re planning on paying off the sticker price in one payment, you may need to secure extra credit to pay for your car.

Going for dealer finance is a popular option for a lot of people just because it’s there and can be done on the spot. What most people might not realise is that you’re welcome to try and finance from alternative, such as a bank loan. Dealer finance is often sold at a higher rate of repayment than a bank loan, which means you end up paying more overall, however you might find it easier to secure than a loan.

To get the cheapest loans (in terms of the APR charged), most lenders will need proof of your ability to repay credit you’ve borrowed. If you’ve got a credit card or a mortgage that you’ve been reliably making payments on, and no adverse information, this should be enough to show any prospective lenders that you are exactly the kind of customer they’re looking for.

Even if you don’t have a spotless credit rating, it’s vital that you make sure there aren’t any incorrect entries on your file that could prevent you from getting the credit deal you want. Arrears appearing on your credit file could put the brakes on an application - something that would be even more frustrating if the information has been lodged in error. It’s not common, but it does happen.

Ensuring that your credit file is optimised is essential for obtaining the best finance deals. A poor credit rating will mean higher repayments, or even being declined completely.

You can check your credit rating at any time with checkmyfile - try free for 30 days and then £14.99 monthly - cancel anytime.

Finally, remember that if you do manage to get the finance you need to buy a new car – regardless of the specific option you go for – the credit agreement will show on your credit file and be visible to lenders very shortly after you get the keys.

It’s crucial that you make all the necessary repayments on time, or not only could you lose your dream wheels, but your credit rating could also take a hit.

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