Buying a car isn’t a simple decision. For most people, their car is likely to be the second most expensive item they own but thankfully there are a number of payment options which can help t make it more affordable. One of the most popular being to purchase your car on finance. A finance option can help you repay the cost of your car through monthly instalments, making it a popular option for people who don’t have a lot of money saved up but financing a car should be treated with caution, just like any other loan or repayment scheme, so here are 5 things to consider.


Can you trade-in your old car?
If you currently have a car and are looking to upgrade then make sure to get the best deal for your current motor. Some finance companies such as Smile Car Finance allow you to trade in your old vehicle to help cover the cost of your downpayment and reduce the total amount you need to repay, which will really help you out in the long run and can help to reduce the amount of interest you need to pay.

Can you afford the monthly repayments?
Although car financing can make purchasing a car more attainable you are still committed to a monthly repayment. This number can vary depending on the car you purchase, your downpayment fee and the interest applied. Once you know the final number for the car you want to be very careful that it is one that you can afford. Don’t forget to also add on the running costs of your new car to your monthly budget including, insurance, breakdown, fuel, road tax and your new finance payment.

Are you aware of any potential hidden fees?
Some finance companies may have hidden fees for thing such as making an early repayment, late payments or charges for exceeding the forecast mileage in your personal contract. Read through the terms and conditions of your agreement very carefully and make sure you understand what fees there are and how to avoid them.

Have you planned for a worst-case scenario
One of the reasons you may be buying a car on finance is because you don’t have a lot of spare cash saved up, this can be a problem if you run into other unexpected monthly costs such as home repairs or a change in your personal financial situation which may cause you to miss your finance repayment or mean that you can no longer afford to pay back the cost of the car. Although these situations may never happen it’s important to know what will happen if they did, so ask your finance provider what options are available if your financial situation were to change or you need to miss a payment.

Have you looked around for the best deal?
Different finance companies may offer different deals. Check your interest rates by looking at the APR (annual percentage rate) and shop around to see if you can find other deals such as 0% interest in the first year, no early repayment fees or free servicing.