I’m a car dealer and my VITAL tip will save you money when buying a car with finance.

AROUND 90% of new cars are bought using car finance and an increasing number of used ones are too.

Car buyers rarely have the required amount of cash lying around to buy a car outright, especially in these trying financial times.


Your credit rating will make a huge difference to the costCredit: Getty – Contributor

We spoke with a car dealer with his own dealership to ask what people should be looking out for.

He wanted to remain anonymous but has been in the business for 15 years, starting from the bottom.

In that time he said he has financed everything from Fiestas to Ferraris for people aged 17 to 70.

When asked about car finance he said: “Your credit rating is key.”

“People rarely have all the money they need to buy the car outright, so finance is the obvious option.

“It’s put on a plate by the dealer, but you need to understand the deal fully and if you have a bad credit rating have a serious think about it.”

According to online used car marketplace BuyaCar: ‘For the average borrower, BuyaCar’s APR is around 9.9%, although other lenders may charge notably more than this.

‘At the time of writing Zuto, for instance, offers 10.9% APR for those with an excellent credit score, while some car manufacturers charge as much as 15.9% APR on used cars.

‘People with a poor credit rating, meanwhile, may be offered anything from 29.9% APR to as high as 49.9%.’

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Our dealer went on: “I’ve seen some people take on car finance with 28% APR because their credit rating is so bad, which I think is a crazy thing to do.

“If you’re in that situation, the best thing to do is try an improve your score. Get a credit card if you can, pay for small things like food shops and make sure you pay it all off on time.”

It’s worth remembering that every car dealer’s agreement with their finance company is different, but dealers can earn very good commission selling it to you.

The larger the amount you borrow through them, the more they make.

The dealer continued: “Depending on your score, it might be cheaper to get a personal loan for the car than use finance at a dealer, but remember this isn’t secured against your car, so they might start taking your stuff if you can. ‘t pay.

“On cheaper cars, say less than £3,000, it’s probably worth just buying outright – if you can.”

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