Are you planning to buy a car? You must have decided how much money you need to borrow to have your dream come true. As interest rates have recently hiked and the term has become lengthier, it is certainly going to be backbreaking to keep up with payments.
If you borrow more than your affordability, you will eventually have your back to the wall. You will lose your credit score, and the lender will likely blacklist you. Although a couple of lenders are providing blacklisted no deposit car finance in Ireland, it does not mean that you will not bother about your affordability.
If you decide to buy a new car, it means you will pay a lot more money because of high-interest rates. You can save some funds on interest by arranging a bigger deposit size. The lower the loan-to-value, the less expensive the deal will be.
Undoubtedly, auto loans do not work as cash loans. They are not as simple as borrowing a fraction of money to be paid in a lump sum after installments. The debt is paid off over an extended period, and it is likely that you face financial ups and downs throughout. You should borrow money to finance your car, keeping this factor in mind.
Tips for buying a car without taking on too much debt
If you are looking to finance your car, you will have to ensure that you can pay down the debt. Buying a new car can be quite challenging if you do not have money to pay for it outright, but here are some tips that can help you own the one without mounting up debt.
Buy a used car
A second-hand car is cheaper than a new car, not to say this. You would not be convinced if somebody told you a used car could be reliable too. When you hear this suggestion, your mind starts conjuring images of worn-out wheels, growling engines, dented bodies, torn seat covers, and the like.
You will have to do extensive and smart research. A used car is not one that is five or seven years old. You should try to buy the one that is two years old. You will likely find such cars in good condition. Since a used car will be cheaper than a new car, you do not need to borrow a lot of money.
If the loan-to-value ratio is lower than 80%, you will likely get an attractive deal. Lower cost means the shorter term, which means the total debt cost will be much lower than what you would be paying if you bought a new car.
Some dealers provide used cars, but you should do more extensive research. Ask people of your acquaintance if they are planning to buy a new car. You can ask them to sell their current car to you. You will likely get a good bargain.
Do homework before having a conversation with the dealer
Preapproval from online lenders can help you compare interest rates offered by dealers. They have their own commission fixed for every deal they make, so it is worthless expecting them to guide you thoroughly.
When you have already done your homework, you will likely throw some questions at them, and when they see you are well prepared, they will likely come down at your offered price. You can bargain with your dealer and try to get the best deal that meets your budget.
With preapproval deals from lenders, you will already know how much you can borrow, so you do not chase expensive cars. Preliminary research will help you make a better decision faster.
For instance, a car dealer can offer you a deal with lower monthly payments, but you can easily track their trick of making profits. Lower monthly payments signify the term of the loan will be an extended one. It results in a higher payment in total due to accrued interest.
Compare deals
As you go to the dealer, you immediately sign the deal offered by your car dealer. However, you do not need to grab the offer right away. When you are offered a deal, you should carefully analyze how much you are about to save.
It is important to consider the deals offered by online lenders. Note that the dealership deals vary from those given by your lenders. Lenders offer various types of car loans while the dealer offers to hire purchase and personal contract purchase.
Ensure that you are familiar with the difference between all of these deals. Further, you need to do basic calculations to see if you can pay down the debt until the final settlement. Do not forget to look over your credit score.
Your credit rating will play a very important role in deciding how attractive a deal you will get. Whether you are looking for a deal from a dealer or a lender, your credit score needs to be good. You do not need to face any problems if your credit report is stellar.
Otherwise, you will get a deal at a high-interest rate. Do your calculations accordingly so you do not face any complications when paying off your debt. In case of a less-than-perfect credit score, you should try to seek a deal from a lender.
Some lenders provide loans in Ireland with no credit check at affordable interest rates. However, they will still be expensive. It is intrinsic to ensure your repaying capacity.
The bottom line
If you want to buy a car without bearing the burden of debt, you should follow the aforementioned tips. It is crucial to do homework, so you do not end up getting a deal that does not suit your budget.
Compare lender’s deals with the dealer’s so you can have an idea of which one is offering better deals. If you find new cars beyond your affordability, you should look for a used car.
