Bor­row wisely

Car Mechanics (UK) - - Dealer’s Diary -

It has been a while since I’ve writ­ten about car fi­nance. It will never be the cheap­est way of bor­row­ing money if your credit score is first class. How­ever, it can be very con­ve­nient and it will cover you if the car you buy turns out to be duff dur­ing the re­pay­ment pe­riod – a per­sonal loan won’t do that.

Deal­ers make good money from ar­rang­ing fi­nance and why shouldn’t they? They’re of­fer­ing a ser­vice. I was schooled by First Na­tional back in the day and some of the tricks they taught you were ruth­less. For­tu­nately, for the punter, those days are long gone. The com­mis­sion is still worth the ef­fort, though.

So if you need to bor­row money to buy a car, I’d al­ways give the dealer a chance to quote you. Just be care­ful they don’t fully pro­pose you. This can mean you’re tied to them for chucky as your fi­nance score won’t like be­ing taken for mul­ti­ple loans across myr­iad deal­ers for the pur­poses of shop­ping around. How­ever, if you’re stuck with a bad credit his­tory then try a dealer first. Don’t be em­bar­rassed, just be up-front with the sales­man about your credit his­tory.

Be­ing hon­est from the out­set is best for two rea­sons. First, your credit his­tory may not be as bad as you think it is – you’d be sur­prised how many peo­ple don’t re­alise this. Sec­ond, a dealer can go straight to the right lender for you.

Deal­ers use spe­cial­ists who don’t ac­tively chase peo­ple with a bad credit his­tory. These lenders are much, much less ex­pen­sive than those out­fits who ad­ver­tise to snare folk with bad credit. A dealer will rel­ish the chance to get you into the car, back into fi­nance and save you money. It’s the triple whammy we all love.

In my ex­pe­ri­ence, most peo­ple who buy a car with a pre­ar­ranged fi­nance deal be­cause they be­lieve they are a poor risk could have saved around £20 per month by let­ting the dealer sort the fi­nance for them. Can you af­ford not to?

But be­fore sign­ing on the dot­ted line, please re­mem­ber that it is all about the APR. Make sure the sales­man’s thumb isn’t cov­er­ing this fig­ure when he shows you where to sign!

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