2022 has been predicted to be the year of the electric car, with lots of new and exciting models coming to the market at more affordable prices. Whether you are looking to go green or not, financing is, for many, the best option for buying or upgrading your car.
However, it can be a bit of a minefield. So, we’ve put together a few tips for financing your new car in 2022.
Check your credit score
Although it is possible to secure a car loan with bad credit, it will negatively impact your options, particularly what interest rate you can get. If you are concerned about your credit history, take some time to improve your rating.
Try clearing your highest-interest credit cards and loans where possible. It shouldn’t take long to improve your credit history after you start reducing your debt. Be sure to shop around because each lender has different options if you have bad credit.
The first thing you could do is run a credit report yourself. Experian and Equifax, for example, provide free credit reports, giving you a clear idea of your credit history, be sure to check your report carefully for any mistakes. This won’t guarantee what car loan you could get but gives you a better idea of your options.
Time it carefully
Once you have set your sights on your dream car, you might be tempted to rush to purchase, but it is important to time your car financing carefully. First, take into consideration the interest rates. Although there was a drop in interest rates for auto loans in 2021, it is predicted that in 2022 rates will gradually increase. Taking advantage of lower interest rates will save you a lot of money in the long run.
Also, take into consideration any other big purchases you plan to make. If you are also hoping to buy a new home in the coming months, being able to afford both commitments is essential.
To do this, you could research mortgage interest rates as well as car loans. To get as clear an idea as possible, you could even get in touch with a broker. For example, Trussle’s mortgage in principle, which only takes five minutes, can indicate what mortgage you could secure and what your monthly repayments would be.
As a rule, it is probably best to ensure your mortgage before applying for your car finance. Then you can budget for your new car without going beyond your financial limits.
Short-term is best
You might be easily tempted by the option to buy a new car fast, even if it’s for an extended period of time, but try to avoid this if possible. A shorter-term car loan is much more beneficial to you, even if it costs more per month.
Usually, you are not getting the best deal when you finance a car over a long time. Remember, the longer you make repayments, the longer you pay interest, so carefully calculate what it will cost you in the long run, including interest. Shop around and get different quotes, then compare what short-term car loan options are best.
Financing is often the best way to buy that dream car. Before applying, take some time to shop around and follow our tips, and you could be driving away soon.
