We recently produced an infographic on the benefits of using a Car Club over traditional car ownership, especially for people who only use a car on a casual basis. However, depending on your location and usage, this is not always a viable option and you may have no alternative than to purchase a vehicle out right.
To help you with this, we have put together a list of considerations when you begin the buying process and also the first six months of ownership.
- 1. Draw up a buying shortlist
- It’s really important to have a shortlist of the type of car you want. Decide what’s important to you, and this goes beyond just the colour and sound system! Fuel economy, road-handling, automatic or manual; these are all key factors to consider. Once you know what you want you’ll have more confidence when you approach dealerships.
- 2. Test drive, test drive, test drive
- Test drive as many cars from your shortlist as possible. Remain open-minded through this process as a car you may not have considered could be the perfect fit. Request to take the car away for a significant amount of time to try it out in different scenarios (some dealers offer 24 to 72-hour test drives). Get a true insight into how the car performs by driving it on different roads and loading it with luggage and people to see what affect that has.
- 3. Check running costs
- Running costs are another good indicator when deciding which car is right for you. If you’re unaware of what the upkeep and maintenance may be, you could end up with a huge, and unnecessary, drain on your finances. Diesel cars offer better fuel economy than petrol, but are more expensive to purchase, as is the fuel. If you’re driving thousands of miles per year go for diesel, otherwise petrol is a better option for more casual use.
Road tax and insurance are other factors to consider. Different cars fall into different categories so check in advance which one your cars fall into. Tyre sizes should also come into your thinking; larger ones cost more to replace than smaller ones.
Lastly, there’s car depreciation to think about. You’ll probably look to sell it one day and will look to recoup a decent amount if possible. Buying a cheap new car could be costly if second-hand demand is poor.
- 4. Finance Options
- After you’ve chosen the car you want there comes the key issue of how you’re going to pay for it (a briefcase full of cash may or may not be one of your options). The dealership will offer you a number of finance options so here’s what to expect:
- Hire Purchase - You pay an initial deposit of at least 10% of the car’s price then pay the remainder in monthly instalments (with interest – typically between 7% and 13% APR).
- 0% finance – You pay a large deposit (approximately 35-40%) and the rest is paid in interest-free monthly instalments.
- Leasing – A good option if you want a new car regularly without actually owning it. Monthly payments are normally between £100 and £400 a month (depending on how long you want the car for and annual mileage).
- Personal contract plan – This is for people who want low repayments and like a new car every two to four years. You put down a deposit and pay monthly instalments, leaving a lump sum to pay off at the end of the contract.
- 5. Differences between seller types
- You have a number of choices when it comes to where you buy your car from. They each have their pros and cons so decide what’s important to you; personal interaction or just getting the best deal no matter what. Below are some of the most popular options:
- Franchised Dealers – Pros: Face-to-face service and a wide choice of cars to look at and test drive; easy to part-exchange; best comeback if anything goes wrong. Cons: Expensive but discounts can be had with haggling; private sale of old car will earn you more than part-exchanging.
- Car Brokers (internet-based) – Pros: Save thousands on main dealer prices; one-stop shop for different makes and models. Cons: No test drives available; limited personal contact; unlikely to offer a part-exchange service.
- Car Supermarkets – Pros: Very competitive pricing; plenty of choice of makes and models; finance packages offered; drive away the same day. Cons: Limited to what cars are in stock; ‘no-frills’ customer service; new cars may be imports so check for full UK specification.
- Import Agents (buying from abroad) – Pros: Able to source big discounts from other EU countries; no paperwork, negotiation or collection; will deliver to your door. Cons: Importing can be time-consuming with lengthy delivery times; price comparing is tricky due to currency fluctuations; large deposit may be required before confirming delivery date.
- 6. First six months of ownership
- After you’ve driven off in your new car, there are a number of important things to be aware of within the first few months of ownership:
- Make sure all the paperwork you received after purchasing are kept somewhere safe. Sounds obvious, but it’s easy to forget where we put these things sometimes and, typically, we can’t find them when we need to. Critical if you experience any problems.
- Keeping the vehicle clean both inside and out will help it fetch a good price when the time comes to sell it. This includes removing dust and dirt from the engine as it can soon build up. Get into this habit as early as possible.
- Try to avoid the temptation of driving too fast and braking too hard. Ease yourself into the first few miles to help maintain performance in the long term.
- It is recommended to change the oil soon after purchasing a new car. After just 20 miles it can contain particles of metal worn off rubbing surfaces inside the new engine.
- Should anything go wrong with your new car within the first 30 days of ownership, you are entitled by law to reject it out of hand and receive a full refund (Consumer Rights Act 2015). This act also entitles you to a full or partial refund if, after 30 days but within six months of purchase, the car has a fault which is not repaired at the first attempt.
- Consider taking out GAP insurance. The value of your new car will depreciate significantly once it leaves the showroom and should it be written off or stolen, GAP insurance will cover the difference between what your insurer will pay and what the car initially cost.