Churchill magazine

Tips when paying for a new car

Updated on: 20 July 2021

A buyer uses a card reader to pay.

So you know what car you want, but how do you plan to pay for it?

Is finance a good option?

If you start thinking about how you want to finance the car at the start of the car buying process, you can research the market and compare current interest rates to discover which dealers are offering the best packages.

Speak to the car manufacturers for details of any current promotions. Customers can be enticed by interest-free payment plans, low APRs and deposit contributions, all of which can save you money.

When comparing offers, it’s important to remember to check all the details and not just the rate or the monthly repayments. The key figure you need to look out for is the total repayable amount. This will let you see exactly how much the finance is going to cost you in the long term.

Good dealers will provide you with a written quote upon request, so get everything you’ve agreed in writing. This will help you to compare different offers at home, and confirm an offer later.

Always shop around – the car dealer is not necessarily the best place to get your finance.

Any good salesman will not offer you their best deal straight away. Remember to haggle!

Don’t sign anything you don’t understand. If anything is unclear, don’t be embarrassed to ask for clarification before committing to a decision.

Paying upfront

So you’ve found the perfect car and have agreed a price with the seller, now’s the time to arrange payment.

The first step is to pay the deposit. For a new factory-ordered car, the deposit could be as high as £1,000, while smaller dealers and private sellers should be happy with a deposit of around £100.

The deposit should remove the car from sale until full payment is made and ownership of the car is transferred.

Remember, if you change your mind, you could lose your deposit, so only put one down when you’re certain you want the car and can pay for it.

You can pay a dealer’s deposit with cash, cheque, debit or credit card. Credit card payments are protected by the Consumer Credit Act so if you can, pay the deposit with a credit card.

Pay the balance of the sale price when you pick up the car. Bear in mind that cheques take time to clear, so either pay by bankers draft, credit or debit card, or you should expect to wait a few more days before collecting the car.

For security reasons you should avoid giving large sums of money in cash. Be aware, as a result of money laundering regulations introduced in 2003, you are not permitted to pay more than £10,000 in cash for an item.

Remember, credit cards are one of the safest ways to pay but you may incur a handling fee on large amounts. Debit cards don’t usually have a similar commission system, but they also don’t offer you the same protection.    

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