How to pay for your new car

Everyone who drives will need to buy a new (or new to them, but used) car at some point. No car lasts forever, and whether you’ve had yours for years and it costs more in repairs than it would to buy something new, or you’ve just paid off your car loan and you think it’s time for a different car altogether, there is a lot of choice out there.

However, before you can go car shopping, you’ll need to know what you can pay and how you’re going to pay for it. The first thing you need to think about is your overall budget. How much can you spare for a car?

This will give you an idea of the sort of vehicle you can buy and help you to narrow down your choices. Once you have found a car, or at least have a shortlist, you’ll also need to know how to finance that purchase. Here are some of the best ways you can do it.

Pay outright

The cheapest (in the long term) way to pay for a new car is to pay the entire cost upfront. This will depend on your budget and the price of the vehicle; it might be that you can get a better car by simply paying a deposit instead (and we’ll discuss this more later).

By paying the entire cost at the time of purchasing the car, you don’t have to factor in any monthly payments or penalties that might be included within the finance agreement. Plus, if your credit isn’t as high as you might like it to be, you won’t need any credit checks, and you won’t run the risk of being turned down and not driving away in the car you’ve chosen.

Paying everything upfront also means that you have more bargaining power; a car dealer is potentially going to allow for a discount if you can pay them what they want on the day.

Of course, if you are buying your new car privately, the only choice is going to be paying it upfront, but you could consider getting a car loan and perhaps topping the budget up with payday loans to ensure you get what you want.

Monthly payments

As mentioned briefly above, it is sometimes possible to pay for your new car every month. Although you won’t have to spend out as much at the outset as you would if you were paying for the full cost at the start, you will need to factor in the interest that will be charged when you take out car finance or a loan to cover the cost.

In some cases, you could end up paying a lot more than the car is worth. However, for those without the full price of the car readily available, this is a good way to get a decent car rather than having to settle for the only thing you can afford.

To lower the monthly payments, you can pay a deposit at the start, and some dealers will require this.

Trade-in your old Car

Assuming you own a car outright when you come to buy a new one, you might be able to trade that car in and use that as a deposit against a new one. You can then either pay the rest of the cost right away, or spread the payments, depending on your budget, what you’re comfortable with, and what your credit allows.

This also saves you the trouble of selling your car yourself, and it means you’re never without a vehicle.

** This is a collaborative post