Approved Car Finance

If you read through Best Cashback Cards, you will find that buying on a prepaid cashback credit card after saving up will not work for many. Thus, lessening the cost of borrowing is essential too. The size, the length and the interest rate of the loan and insurance add-ons determine the increase of borrowing costs. Lengthening the time frame is most often more expensive than increasing the rate.

Dealer Tricks

There are dealer tricks that you need to watch out for; they make more on approved car finance than on the car.

• ·Flat Interest Rates – There is apparent danger if the A, P and R don't follow the rate. This means the rate is added on any outstanding debt when the banks use the APR interest rates. For instance, you loan $5,000 in 5 years. On the last year, you pay only interest on the remaining amount, say $1,000. The total interest will be $1,200 at 9% APR.
• ·As you can see, 9% may sound cheap. But actually, it is  roughly equivalent to 18% APR. So if you are doubtful, you should ask about the total repayments including the charges.
• ·Payment Protection Insurance (PPI) – Most cheap loans gain profit due to expensive insurance, so still you will pay much. Again, always check the total costs. Overpricing on PPI insurance is common, so examine the Reclaim PPI article.
• ·Weekly Price Quotes – $53 a week sounds cheap. But why will they give you a weekly quotation when you are going to pay monthly? When you multiply the weekly by the 4.33, you get a whooping $230 per month! Even worse, sometimes the repayments are quoted on an extended loan - your $53 weekly becomes a gigantic $19,300 total after seven years.

Your Cheapest Approved Car Finance Options

People who maintain outstanding credit history want to avoid approved car finance; for them this is the cheapest option. Although hire purchase, part payment exchanges or clever contracts may sound attractive and sometimes have the benefit of section 75 protection. However, later you will regret overstretching yourself. Use your savings to lessen the loan amount, loan as little as possible, repay as soon as you can and always stick to your budget.

• ·Avail of a cheap personal loan. Read the Cheap Loans Article for comprehensive details about cost effective and easy ways to borrow.
• ·Take advantage of 0% interest on credit card purchases. This is the ultimate cheap borrowing. Some credit card companies give over 9 months on 0% deals (read the article about Best Card for Spending). If the 0% is only a promo for a certain period of time and it already elapsed, you can avail of 0% balance transfer (see article on Best Balance Transfers). However, do this only if you're financially in good condition.
• ·You need to take note however, that not all firms accept credit card purchases. And if they do, not all have the 0% promo. Some charge 1% to 2% fees for using credit cards. But even with that, it is still the cheapest option.
• ·Benefit from the dealer's 0% finance. If the dealer genuinely offers an interest-free deal and you are avoiding expensive PPI, this is a good deal as opposed to the offer of 0% for one year and then goes back to 'normal' rates. Try to compute how much the vehicle costs without the 0% finance deal and compare if the price is indeed lower.