How to Find the Cheapest Car Loans

If you’ve found your ideal vehicle, whether it’s a dream premium sports car or a practical SUV to run the family around, you’ll now need to finance it. If you’ve got the savings to do so, great, but for the majority of you this will not be an option. You’ll need to look for finance options to do this instead, involving finding the right lenders to offer you the terms that you need. This should be a simple process but can be difficult due to the sheer amount of options out there. Here are some of the ways you can reduce your costs and find the cheapest car loans.

Compare Online

One of the easiest ways to find the best offers for a loan against a car is by using an online comparison tool. You should check how the offers are ranked, ensuring that you look at the deals that are best overall. The reason why you should do this is just because an offer has the lowest value repayments per month, doesn’t mean it will be the lowest value overall. You may have to pay a higher interest rate with lower monthly repayments. A comparison site will be able to speed up the process of searching for loans much quicker, as within a few clicks you’ll be able to see all the available offers for you on the market. This can include banks and online direct lenders so that you have a full overview. Filtering the results correctly will help you see the best overall deals, and with most online lenders, you can get quick approval and same day funding if approved.

Check Your Credit Score

Ideally, you’ll already know what your current credit score is, especially before you start applying for loans. You can do this by getting in contact with a credit reference agency who can show you what your rating is. Normally, you can see your score without charge, but if you want to see a more detailed report, you’ll need to either sign up or pay a one-off fee. If your score is currently showing good to excellent, you won’t need to worry too much about finding out the details of your score. However, if it is lower than expected or showing fair to bad, you should spend the time to find out what is causing this. You may already know what is causing this, such as multiple missed repayments or a default against your name. By finding out what the issue is, you can then work out if applying for further finance is going to be beneficial or only cause you to have a negative mark on your report.

Consider Leasing as Well as Car Loans

With so many loan options available, you may have overlooked the option to lease the vehicle you want. With a reported 9 out of 10 people confused over motor finance options, you may prefer to look at the available lease options. Leasing means you can choose a car to have over a 3-5 year period, paying monthly instalments, sometimes with a deposit upfront. At the end of the term, you can then give the car back and change to a different one if you prefer. Although you won’t own the car outright, it’s an increasingly popular way to afford a higher value vehicle. Monthly repayments are usually affordable, and you have the option of changing your vehicle to another new one every few years. 

Pay a Bigger Deposit

If you can afford to, you should definitely pay a bigger deposit when searching for car loans. If you can raise the funds, or preferably save up over a number of months, you can pay a larger upfront cost. This way, you can reduce your monthly loan amount considerably, saving huge amounts in interest. The idea is to not have to take out a loan over too long a period, meaning the amount of interest should be lower overall than if you kept it for an extra year or two. It may seem like you’re spending more money to begin with, but overall the total costs involved will be much less. If you can find lenders that will take a larger deposit you should consider doing so. Some lenders may not prefer this as they will not make as much interest on your loan, so shop around and ensure that the one you go with will allow this. Additionally, if there is an option to clear the balance quicker or earlier, you should go for loans that allow this. Keeping these points in mind will help to ensure you will always find the cheapest loans on the market for you.