Car dealers are desperate for your signature and will offer all sorts of deals to get you to sign on the dotted line. The various promotions offered can be confusing, so here’s our guide to the main types of deals…
Reductions
The most simple and common promotion is a price reduction. Manufacturers don’t often give much away for free and there’s usually a reason why they slash prices. This can be due to lower than expected sales for a particular model, the model may be about to be replaced or it has received poor reviews. Read up before committing and enquire why the dealer has just knocked a thousand or so off the list price.
Low finance
Persuasive manufacturers make buying a new car easier - and more tempting - by reducing interest rates. Whether they are offering 0% APR or finance deals below 10%, these deals vary widely and it’s important that you read the small print. APR, by the way, stands for Annual Percentage Rate, which is the true rate of interest that you pay for your finance agreement. Ultimately, the lower the APR, the better. Also be aware that finance deals which claim to be low aren’t always the lowest on the market, so compare dealer’s interest rates with those offered by banks on personal loans to find the best deal.
Complimentary upgrades
Whether it’s extra kit, a larger engine or a better trim level, complimentary upgrades are another incentive used by manufacturers to lure buyers into a deal. Be sure to take a look at the equipment section to know exactly what you should be getting on your car as standard and make sure the dealer isn’t trying to hoodwink you into thinking that they’re giving you more for free than they actually are.
Deposit contributions
Manufacturers occasionally offer to lighten the initial outlay by contributing a small sum towards the deposit. This is useful, making the deal more affordable and, even if you can afford the full deposit, take advantage of the dealer’s generosity and add your amount to it - this takes a larger chunk out of the total sum and lowers your monthly repayments.
Free insurance
Some manufacturers offer one year’s free insurance on certain models as a way of sweetening the deal. This can prove tempting and certainly reduces your outgoings for the first year of ownership. Free insurance isn’t without its drawbacks however: younger drivers may find that they are ineligible if fall below the deal’s minimum age requirements.
Cash back
These deals are quite rare, but a cash back offer is similar in many ways to a reduction. However, instead of receiving an initial discount from the list price, buyers pay the full amount and then receive some cash back afterwards. This is a way of keeping residual values high, and buyers still benefit by paying less.
Why buy new? Why buy an Approved Used?
