How to get a Car with low Monthly Payments 

Getting a car on finance can be a really exciting time! Car finance allows you to get a newer, better car than you would with cash and pay for it over a term that suits you. It’s worth remembering that car finance is never guaranteed, and you will need to meet the lenders criteria first. But once you’ve secured a car finance deal, how can you ensure that you’re getting the cheapest deal possible? Low monthly payments can make car finance more accessible when you’re on a budget and there are a few factors you can consider helping lower your repayments. Let take a look at the top 5 tips to get a car with low monthly payments. 

monthly payments

  1. Work on your credit score

When it comes to financing a car, your credit score is really important. Lenders check your credit score when you apply for finance to see which type of borrower you have been in the past. Missed or late repayments increases the risk as you’re more likely to default on future finance too. By taking some time to increase your score and showing lenders that you can handle credit responsibly, you can get access to easier acceptances and also lower rates. 

  1. Save up for a deposit

There are many ways you can get a car on finance without a deposit but for agreements such as hire purchase, it can be worth having some money to put down. Hire purchase is a form of finance which splits the value of your chosen car into equal monthly payments with interest till the end of an agreed term. By putting more money down at the start of the agreement, you are reducing the loan amount and therefore lowering the monthly payments. 

  1. Choose PCP

If you’re solely focused on the amount you pay each month, you could be best suited to a Personal Contract Purchase agreement. PCP deals can benefit from lower monthly payments as unlike HP, the value of the car isn’t split into equal payments. Instead most of the loan is differed until the final balloon payment. You won’t own the car throughout the agreement and can only take ownership if you pay the final balloon payment or get a lender to refinance a balloon payment instead of paying it off in one go. PCP can mean that you can even get a brand-new car with payments similar to that of a used car on hire purchase.  

  1. Lengthen the loan term 

When you take out car finance, you can choose a term that suits you. Usually car finance agreements are spread over 3-5 years, but you can benefit from flexible terms to help your deal fit it into your budget. By choosing the longest term possible, you can help to reduce how much you pay each month as you are taking longer to pay it off. Choosing a longer term can reduce your payments but means you will be paying interest for longer so it may not be the most cost-effective way to get a car.

  1. Refinance your loan 


If you currently have a car on finance and your payments are too much to handle, you could consider refinancing your current loan. It’s pretty common for a drivers circumstances to change when they finance a car over a number of years. Refinancing is when you replace your current car finance deal with another loan. Usually your new loan has better terms, and you can choose to shorten or lengthen the agreement. It’s best to wait until your around halfway through your agreement though as anything before this may not be as cost effective. If you’re really struggling to meet your repayments, you should never miss a payment and instead speak with your finance lender to see how they can help you. 


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