5 Expert Tips For Getting The Best Deal On Your Car Finance in 2024

5 Expert Tips For Getting The Best Deal On Your Car Finance in 2024

Looking to secure the best deal on your car finance in 2024? Buying a car is a significant investment, and financing it can feel complex, but it doesn’t have to be stressful. 

Here at Bright Motor Finance, we want to equip you with the knowledge you need. Whether you’re exploring options like Personal Contract Purchase (PCP) or Hire Purchase (HP), or simply seeking the most competitive rates in the UK market, having the right knowledge is key. 

This guide offers five expert tips to empower you to make informed choices and save you money on your car finance. Let’s explore these strategies and make your car buying journey smoother and more affordable.

Negotiate: Don’t Be Afraid To Shop Around

When it comes to car finance, the interest rate you secure significantly impacts your overall cost. Don’t get caught out by the first offer that comes your way. Take time to shop around and compare rates from a variety of lenders, including banks, building societies, credit unions, and online lenders.

Remember: the advertised Annual Percentage Rate (APR) isn’t the whole story. It might look attractive, but it doesn’t necessarily factor in additional fees that some lenders may charge. To get a true understanding of the total cost of borrowing, be sure to ask about any upfront fees, arrangement charges, and ongoing costs associated with the loan.

By comparing rates and understanding the full cost of borrowing, you’ll be in a strong position to negotiate and secure the most competitive car finance deal for your needs.

Alternatively, skip the headache of halling and let our team of specialists at Bright Motor Finance do the work for you. Apply for a free, no-obligation quote today and let us find you a perfect deal from our network of reputable lenders. 

Budget: Know Your Numbers Beyond Car Payments

Before diving into car finance, it’s crucial to understand what you can realistically afford each month. This isn’t just about the car finance payment itself. Factor in other ongoing expenses that come with owning a car, such as:

  • Insurance: The cost of car insurance varies depending on your age, driving history, location, and the car itself. Get quotes from a few different insurers to get a ballpark figure.
  • Maintenance: Even reliable cars require regular servicing and maintenance. Budget for these costs to avoid surprises down the line.
  • Fuel: Consider your typical mileage and fuel efficiency of the car you’re interested in. Factor in current fuel prices to estimate your monthly fuel costs.

By taking these additional costs into account, you can ensure your chosen car finance plan fits comfortably within your monthly budget. Don’t overstretch yourself – aim for a payment that allows you to maintain your financial well-being while enjoying your new car. 

Additionally, you can use technology to simplify things! Online tools, such as our Bright Motor Finance Car Finance Calculator, can help you budget more effectively by offering a quick overview of your potential monthly payments. 

Consider Finance Options: Personal Contract Purchase vs Hire Purchase

Car finance isn’t a one-size-fits-all solution. The two most popular options, Personal Contract Purchase (PCP) and Hire Purchase (HP), both work slightly differently. It is therefore critical to identify which finance option aligns best with your financial goals.

Below is a table summarising the key differences between PCP and HP:

FeaturePCP (Personal Contract Purchase)HP (Hire Purchase)
Monthly PaymentsTypically lowerFixed
Ownership at the EndOptional (balloon payment required)Yes (after all payments made)
Flexibility at the EndOptions to either own the car outright, return the car, or use car towards a new dealFull ownership.
Mileage RestrictionsOften included with potential extra charges for exceeding limitNo restrictions

PCP is a good fit if:

  • You prioritise lower monthly payments.
  • You want flexibility when the agreement ends.
  • You plan to change cars frequently.

However, PCP may not be the best fit for your needs if you plan to keep the car for a long time. Since you don’t own the vehicle outright with PCP, you’ll end up paying more in total compared to HP if you keep the car for the long haul. Additionally, if you know you rack up a lot of miles on a daily basis, the mileage restrictions attached to PCP may be a dealbreaker. 

HP is a good fit if:

  • You prefer to own the car outright at the end.
  • You value predictable monthly payments.
  • You plan to keep the car for a longer term.

However, the higher upfront costs and limited flexibility of HP is not ideal for everyone. Unlike PCP, you don’t have any options at the end of the HP agreement. Once the final payment is made, the car is yours, and there’s no opportunity to upgrade or walk away without selling it yourself. Moreover, you need to weigh up the car’s potential depreciation in value, as you could end up owing more than the car’s worth. 

Not sure if PCP or HP is right for you? Our car finance gurus can help! Get personalised advice and a free quote tailored to your needs in just 60 seconds today.

Credit Scores: Unlock Better Rates

Your credit score acts like a financial report card, influencing the interest rates lenders offer you. Simply put, a higher credit score translates to lower interest rates on your car finance.

So, before applying, take steps to improve your credit score and potentially unlock better deals. Here’s what you can do:

  • Check your credit report: Obtain a copy of your credit report from a credit reference agency. Look for any errors and dispute them if necessary.
  • Pay bills on time: Showing a consistent history of on-time payments across all your bills significantly improves your credit score.
  • Manage credit responsibly: Don’t max out your credit cards and keep your overall credit utilisation ratio low.
  • Consider a secured credit card: If you have limited credit history, a secured credit card can help build positive credit by demonstrating responsible credit use.

Improving your credit score takes time and discipline, but the potential benefits are significant. By putting in the effort before applying for car finance, you could secure a more favourable interest rate and save a substantial amount of money in the long run.

Read the Fine Print

Before finalising your car finance agreement, take the time to thoroughly read and understand all the terms and conditions. Admittedly, this is the least exciting part of the car buying journey, but it is crucial to avoid any last-minute surprises. 

Here are some key details to pay attention to:

  • Early Repayment Penalties: Some lenders may charge a fee if you decide to pay off your car finance agreement early. This penalty is usually calculated based on the remaining interest you would have paid. Knowing if there’s an early repayment penalty and how much it is can help you factor that into your overall financial plan.
  • Mileage Restrictions (PCP only): As mentioned earlier, PCP plans often come with mileage limitations. Exceeding these limits can result in additional charges at the end of your agreement. Be sure to understand the specific mileage allowance for your chosen PCP plan and adjust your driving habits accordingly if needed.
  • Other Fees: Look out for any additional fees associated with the loan, such as arrangement charges, admin fees, or option-to-purchase fees (PCP only). Understanding the total cost of borrowing empowers you to make a more informed financial decision.

By taking the time to decipher the fine print, you’ll ensure there are no hidden surprises lurking in your car finance agreement.

For a surprise-free exploration of bespoke car finance deals, get in contact with Bright Motor Finance today! We are to guide you through the financing process, step-by-step, and are at hand to answer any question to ensure you make an informed decision.

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