How to save money on your car finance payments

Buying a car can be an expensive investment, especially if you opt for a new car. With finance options available, this makes it easier to help buy a car. Here’s our tips on how you can save money on car finance as well as ways you can reduce your car finance payments if they become too much for you to handle.

You can save money on your car finance payments in several ways.

Here are just some strategies that you could consider:


If your finance agreement allows, making overpayments can reduce the total interest you’ll pay and shorten the loan term, says Ocean Finance. A higher credit score can help you get lower interest rates too.


You can always check if you can get a better deal with lower interest rates by refinancing your car loan. According to Carmoola, if interest rates have dropped or your credit score has improved, refinancing can reduce your monthly payments.

Paying off Early

If you’re financially able, paying off your car finance early can save you money on interest. However, be aware of any early repayment fees, says Money Expert.

Negotiating the purchase price

According to NDRC, a lower purchase price can lead to lower monthly payments. A lower purchase price can lead to lower finance amounts.

Choosing a shorter loan term

Opting for a shorter loan term will increase your monthly payments but decrease the total amount of interest paid. Spreading payments over a longer period can reduce monthly payments, but may increase total interest paid.

Larger deposit

Putting down a larger deposit can reduce the amount you need to finance and thus lower your payments, says Money Helper. So if you did happen to have the funds available to put down the deposit plus more, then go for it!

Reclaim tool

If you purchased a vehicle on finance before a certain date, you might be eligible for a reclaim due to unfair practices. It’s worth checking if you qualify for this, says Money Saving Expert.

Consider a Personal Contract Purchase (PCP)

This could offer lower monthly payments with the option to buy the car at the end of the term, says Money Saving Expert.

Buying a car on finance has become increasingly popular. In the UK, for instance, more than 90% of private new car buyers use some form of finance like Personal Contract Purchase (PCP) or lease finance, according to Car Buyer.

Before doing so, and entering into any agreement it’s always a good idea to read the terms of your finance agreement carefully before signing anything and before making any changes to your payment plan. If you’re considering any of these options above, but are unsure on anything, you could always speak to your finance provider to understand the implications fully.

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