The new 66 plate is released on Thursday September 1 and many people will be considering buying a new car.
There are important things to consider when purchasing a vehicle that you may not be aware of.
In this short guide I’ll explain everything you need to know when buying a car, whether it be brand spanking new, or pre-owned.
Decide on needs over wants
This is probably your most important decision.
Having a clear understanding over what you want over what you need may seem easy, but often we confuse the two.
Do you need a decent little run around to get you from A to B, need to upsize to a family model as your brood increases, or need to downsize as children grow up and flee the nest?
It comes down to substance over style I suppose, and, if you haven’t got an endless budget it is some thing you must give serious consideration.
Once you have decided what you really need, running costs are next priority.
How much is this bad boy going to cost in fuel consumption, insurance and road tax?
These running costs add up, especially if you’re using credit to buy the car in the first place, so make sure the car you’re buying isn’t going to mean you end up struggling to juggle all the associated costs that come with it.
There is absolutely no point in having a big, fancy all-singing-all-dancing car, if you can’t afford to run it in the long run.
How are you going to pay for the car?
If you have been sensible enough to save for the car (and had time to do so – emergencies happen), you’ve put yourself in a slightly better position compared with those looking to use finance.
For one, there is no interest to pay on your purchase, and, when buying with cash, you may be able to negotiate a better deal with the seller.
Remember cash is king, and anyone looking to sell you anything wants yours.
Haggle away – how very un-British – and get as much off from them as you possibly can.
If you have the luxury of time, use the old fear of loss technique and say you’ll check other local garages first.
You’ll soon get a decent discount.
However, if you don’t have the cash to pay it off in one, there are pretty much only two options left to you – a personal loan, or dealer finance.
Take a personal loan and you can expect to pay interest on your lump sum borrowed, which you pay back over a set term.
As the loan isn’t secure against the vehicle you own it out right straight away.
If you choose to go down the dealer finance route, there are three main types you can choose from.
Hire Purchase (HP)
If you decide on hire purchase you will fist need to pay a deposit, followed by regular monthly payments over a set term.
In some instances you may be given the option to hand back the car halfway through through the term.
You only fully own the car once all the payments have been made.
Personal contract purchase (PCP)
Opting for PCP means you would also be required to pay a deposit.
You make a monthly payment based on an agreed mileage and depreciation of the car.
Once your agreement is is up, you can give the car back and walk away, or pay a lump sum so you take ownership of the car.
Personal contract hire
PCH is basically an agreement where you rent the car over a long-term period.
You pay a deposit to take the car and then continue to make monthly payments until the end of your contract.
Once the contract is finished, you hand the car back.
What should I do with my old vehicle?
If you have an old car you want rid of after the purchase of your new car, there are three things you can do:
- Sell privately through a local paper, eBay, Gumtree etc.
- Use it in part-exchange on your new vehicle
- Sell it using a car buying service such as We Want Any Car
What should I do about my insurance?
You must inform your insurer if you plan to sell or part-exchange your car before you buy a new one.
There are a couple of options here. Amend your existing plan so it now covers your new car, or just cancel it and start again.
Whichever you decide, don’t just take the first offer from your current insurer.
They can try and get you over line by threatening fees, but it’s better to factor those fees into the overall price, you could still be better off moving supplier.
Amending a policy usually means an ‘admin fee’ is charged to change the details of your cover.
Your cover could increase as the insurer may see your new vehicle as higher risk of theft or accident than your previous one.
If you cancel your policy, you’re likely to be charged a cancellation fee and will only get back a percentage of your premium, the combination of which could leave you significantly out of pocket.
So, as mentioned above, take time to make sure the option you are taking is the cheapest.
Your no claims entitlement for the year the policy was running is also lost by cancelling.
Do I need gap insurance?
Cars lose their value quicker than an X factor contestant loses their fifteen minutes of fame.
20% disappears into the ether the minute you drive it off the forecourt in VAT – so gap insurance is there to cover the difference between the amount you pay for the car and the amount the insurer will pay out as a claim once depreciation has been taken into account.
You could walk out of the car dealership happy as Larry with your new £20,000 car, yet have an accident a few months later your insurer may only offer you £16,000 – the value of the car now.
That would leave you needing to find another £4,000 to cover the difference if you wanted a like-for-like model.
Gap insurance is designed to cover that difference.
What happens to my road tax?
The days of transferring road tax from one vehicle to another are over.
If you’re selling your car you need to make sure the relevant sections of the V5C is sent to the DVLA notifying them of a change of ownership and you’ll receive a refund on the full months tax you’re owed.
You must contact the DVLA if you want the refund so make this one of your priorities.
Once you have your new car you can tax it online, by calling 0300 123 4321, or call in person at your nearest Post Office that deals with road tax.
Buying a new car doesn’t have to be a a nightmare if you know what to expect when making your purchase.
Paying in cash is obviously my most recommended course of action, but life-is-life and I understand that’s not always possible.
One thing is for sure, if you use finance you will definitely pay much more.
Don’t be afraid to haggle, it’s something as British people we seem embarrassed to do, living abroad knocked that particular British trait right out of me.
Give it a try, you’ll be surprised what you can get knocked off!
Have you got any good tips for buying a car?
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