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!