Tips and Advice By duoplus / 29 July 2019 Car financing is expensive, and the longer you pay it off, the more you’ll pay. In this article, MoneyHub.co.nz researcher Ch ristopher Walsh outlines five ways to cut down the cost of car loans without compromising on save money on the car itself. #1 Get car financing agreed BEFORE you hunt for a carKnowing how much you can afford gives you the best bargaining power and full confidence. You can also negotiate the price you pay like a cash buyer knowing you can draw down on the finance. #2 NEVER get car financing from a dealer The WORST place to get financing is at a car dealership. You have no options to compare, no bargaining power or any advantage. You may get some ‘deal’ proposed to you, but car financing is best arranged outside of a car yard. By agreeing to whatever the car sales team quotes you, it’s almost certain you will overpay. #3 Try and arrange a secured loanThe cheapest interest rates on car loans will be on secured terms – this means the lender has a right to sell your car if you can’t make the repayments (exactly like a bank can sell a house if the mortgage isn’t repaid). You’ll be in a better position if you can fund a good portion of the loan – 20% or 30% will give the lender confidence and a lower interest rate. #4 The cheapest car finance is a product of fees, interest rate and termsQuite simply, to arrange the most attractive car financing, you’ll need the lowest interest rate, lowest application fees and the shortest term with the most frequent repayments (i.e. weekly vs monthly). i.e. If your loan is $20,000 and your interest rate is 15%, you’ll pay $8,000+ in interest if you pay it back over 5 years, but only $3,200 if you pay it back in 2 years. #5 Don’t EVER miss a car repaymentMost lenders charge at least $25 or even $50 for each missed payment, plus you’ll have pressure to meet the next payment while you sort out the overdue payment. Budgeting for car insurance can be a hassle as the costs can be higher. Be sure to so prioritise your repayments with your rent and mortgage to avoid any hassles from your car finance company. Want to know more? Visit MoneyHub’s car loans guide.