We compared the market for you…

We compared the market for you, find out how much you could save…

How do I know I have a good deal on my car finance?

It’s safe to say that most people look forward to getting something shiny and new, it’s exciting and makes us feel good.  However, sometimes, the excitement can get in the way of good judgement, and if this happens, you may end up with a less favourable deal.

So, what steps can you take today to make sure you are getting a good deal? 

The cost of borrowing money has changed significantly in recent years. While cheap money and super-low interest rates are no longer the norm, there’s still a need for financing big-ticket purchases like homes and cars.

At Magnitude Finance, we keep a close eye on market rates to ensure our customers get fair deals and find the right vehicle.

Here are our top five tips:

Top Tip 1 – Do your research and compare.

Without a benchmark for what constitutes a competitive APR rate, it’s challenging to discern a good deal from a bad one.  While the task of scouring through numerous offers online might seem overwhelming, there’s no need to worry. We conduct regular market surveys to provide you with valuable insights.

For instance, in Q2 2024 we compared ten of the UK’s top dealer groups’ adverts on a popular used car sales site, we uncovered significant variations in APR rates. While Magnitude Finance offered 8.9% APR with £4,150.47 in charges, the highest rate was 13.9% with £6,519.84 in charges. The average APR rate stood at 12.11%. Notably, a customer unaware of market rates could end up paying £2,369.37 more in interest charges by accepting a dealer’s offer without comparison. 

Over the 10 different offers we compared to Magnitude, on average we have a 26.51% cheaper APR, saved 5.42% (or £31.83pm) on the monthly payment and 26.69% on the charge for credit – this is particularly important as in this comparison that’s a saving of £1,519.05 over the length of the agreement.

Bearing in mind this research is conducted on a £22,500 advance (£25,000 cost price car), picture how much Magnitude could save you if you’re looking for something more expensive, the savings really add up!

Representative Example – Personal Contract Purchase: Cash Price £35,000.00, Deposit £2,000.00, borrowing £33,000.00 over 4 years at 8.9% Representative APR (fixed). 47 monthly payments of £496.83 followed by a final payment of £18,590.00. Total cost of credit of £8,941.01 and total amount payable of £43,941.01. Based on 8,000 miles per annum, excess mileage charges will apply if this is exceeded. Finance subject to status 18+ only. 

Top Tip 2 – Check your credit score.

Monitoring your credit score is essential to securing favourable APR rates. With three main credit bureaus—Equifax, Experian, and TransUnion—holding crucial data, finance companies rely on this information to assess your creditworthiness. Regular monitoring allows you to rectify any inaccuracies and understand how to manage your score effectively.

Magnitude Finance have partnered with CheckMyFile, they are a UK-based credit reporting agency that provides individuals with access to their credit reports and credit scores from the three main credit reference agencies (CRAs) in one place.  You can obtain your free report here to help empower you to make informed financial decisions. Trial period valid for 30 days, then £14.99 a month, you can cancel any time.

Top Tip 3 – Compare the Total Amount Payable (TAP)

The Total Amount Payable (TAP) offers a holistic view of the true cost of a car finance agreement, considering deposits, monthly payments, fees, and potential balloon payments. This comparison is particularly crucial for Personal Contract Purchase (PCP) agreements, where seemingly lower monthly payments may hide higher APRs and final balloon payments.

If you just look at the monthly payment in isolation, you might end up paying significantly more if you settle the agreement early or decide to buy the car at the end. 

Of course, if your intention from the start is to go the full term of the agreement and hand the car back, then the lowest payment might be best, but situations change, so it is worth at least knowing what the impact of these variables have on your wallet!

Top Tip 4 – Beware of add-ons

When buying a new, or used car, particularly from a dealer, you will often be presented with a range of ‘add-ons’, these are typically insurance-based products and can range from tyre protection insurance to upgraded warranties and paint protection. 

These products offer a good revenue opportunity for the seller, so they will be keen to add these to any sale, before you accept the offer you might want to check the whole of market to give you the peace of mind that you have the best product, offering the right protection at a fair price.

Top Tip 5 – Car sale and finance, they can be separate.

Remember that the car sale and finance agreement are separate entities of the buying process. While you can secure the car with a deposit, it’s prudent to take your time exploring your finance options.

Our earlier tip, Tip #1, emphasised the potential savings available through online finance specialists like Magnitude Finance. However, there are other critical elements to consider when securing a good deal.

At Magnitude Finance, we pride ourselves on offering a personalised service that blends online convenience with dedicated support from real people, our Trustpilot 5-Star rated team is here for you.

We go the extra mile by assigning you a dedicated account manager to oversee your finance transaction from start to finish. This ensures a seamless and hassle-free experience, giving you peace of mind throughout the process.

In summary, thorough research, comparison, and consideration are key to securing the best deal. By following these steps, you can rest assured that you’ve made an informed decision before taking delivery of your new vehicle. It’s better to invest the time upfront than to regret it later.

For a quote on your new car, head to our online calculator here

8.9% APR Representative. We are a credit broker, not a lender.