How to Raise the Money for a New Car

There comes a time when an old car is no longer road worthy. It may have been damaged in a crash or simply run its time on the road and is now more expensive to repair and maintain than it’s really worth. With maintenance and spare part costs continuing to rise above the official rate of inflation, everyone needs a little help with their finances.

With many families finding it difficult to cover living expenses the need for a new car can be disappointing and stressful. However, when needs must there’s nothing you can do but work out how you’re going to be able to replace your four wheels. If you’re worried about the cost, here are some useful tips you may find helpful in helping you to finance the expensive purchase. They are in no particular order; rather, let them serve as a guide to helping you get the best car at the best possible price.

Raising Money in a Hurry

You may be tempted to look for payday loans or something similar but it’s always better to avoid these options. Short term loads can cause a lot of extra financial strain, and if you’re unable to make the payment on the deadline, the amount you need to pay back will rise quickly. Payday loans have been vilified in the press as being nothing short of ‘legalised highway robbery’ so do not fall in to the trap and become a victim.

Rather than opting for these short term loans you may be better off seeing how much money you can raise from what you already have.

For example you can:

Sell or part exchange your current vehicle and use the money towards the new vehicle
Ask your employer to give you some overtime; you’ll pay more tax but at least you can raise a deposit more quickly should you need to
Clear out the home and sell everything your family no longer needs or uses. Check for old electronics, phones, clothing, CDs and DVDs as well as furniture that you’re simply storing rather than using. 

Car Finance Options

It’s also worth looking at leasing a vehicle or using car finance as an option. Car finance can be sought even if you have a relatively poor credit rating, although the interest will be higher. Car finance deals are usually spread out over three to five years, making the monthly payments much more affordable and manageable.

Before you begin looking for car finance deals you’ll need to establish how much you can afford to pay each month out of your current income. Be brutally honest with your spending and err on the side of caution to ensure you really can afford the cost. Once you know your monthly limit you’ll be able to ask for quotes and find out what amount you’ll be able to borrow before you begin looking for cars.

Avoid the Depreciation Hit

When you buy a new car, even on finance, you immediately lose money within the first twelve months of ownership. This is money you won’t be able to get back or replace even if you sell a car that’s relatively new. Even if you are able to buy a new car using car finance it’s probably better to look for a second hand version instead. You may be tempted to go for what is known in the trade as ‘nearly new.’

Nearly new and used cars are a sensible option as the original buyer took the depreciation hit for you. If you buy from a dealership you’ll still be able to use car finance too, helping to spread the cost over the years without having to pay through the nose.

Image attributed to: freedigitalphotos.net –marcus-