Whether you’re in the market for a brand new vehicle or you’re looking for a second hand car, there are a few things you need to consider before you sign on the dotted line. In this guide, we’ll look at the general rules for buying a car; more specific rules you should follow when buying both a new or used vehicle; and the different ways to finance your new purchase.
Think about what you really want from your car and do some research into which makes/models can offer these features. If you don’t do this important first step, then you could end up with a car that is difficult for you to use.
Know how much money you can spend and stick to this budget. You must consider not only the initial cost of the car, but also how much it costs to run, insure and tax. This will take a little time but is more than worth it in the end.
Compile a shortlist of car models that you’re interested in and look at different sellers – both dealerships and private sellers – to get an idea of the different prices and specifications available.
When opting for either a new or used vehicle, it’s important to think about the resale value. Black cars tend to sell for a higher amount than other colours, and cars with decal stickers or unusual modifications will likely sell for less.
Before any money changes hands and before you sign anything, you should definitely take a test drive. Try to drive the car for more than a 10 minute spin around the block if you can – some dealerships will allow you a 24hour test drive.
Always go to view a vehicle when the weather is good and it’s daylight outside. Rain, snow and darkness can mask problems such as dents, scratches and fading paintwork.
When you’ve got a certain make and model in mind, read as many reviews as you can about that particular car. Motoring websites, magazines and independent reviews can all have some useful information for you, and it can help you to identify common issues if more than one reviewer has mentioned the same thing.
When buying a new car, you can often haggle a little and have extras thrown in if you ask nicely. Keeping your options open and looking at a number of different cars can mean you get offered better deals automatically, as dealers are likely to try to ‘outbid’ each other for your custom.
Before buying a second hand car, always perform a HPI check by putting the registration of the vehicle into an online tool like this one. It may cost a small fee, but you’ll be told a lot of information about your new potential car, including whether it has outstanding finance, whether it’s been recorded as stolen or if the mileage is off.
When looking at a second hand car, consider the year it was issued and look at the condition it’s in. Many people are drawn in by low mileage, but if the car seems old compared to the mileage then this could be cause for concern, as some people have been known to doctor the odometer to be able to sell the car for more.
If possible, ask for the service history of the vehicle. If the current owner has no documentation or receipts then you may want to use your own judgement as to whether you think it’s been looked after properly or not.
How To Finance Your Car
There are many different ways to fund your new car – we’ve summarised a few of the most popular methods below:
A car bought on a Hire Purchase (HP) agreement is designed to be paid back in installments over a certain period of time. You’d be expected to make a deposit, which is usually set at 10% of the value of the car. You’d then make monthly instalments and you would only own the car once the final payment had been made. This means that you cannot sell the car during the HP term unless you get permission from the lender.
If you want to change your car often – around every 2 to 4 years – then Personal Contract Purchase may be an option for you. It works just like Hire Purchase in the fact that you pay a deposit of around 10%, except that the monthly payments are usually smaller. At the end of the term, you can pay a lump sum to make up the value and keep the car, sell it privately to pay off the remaining loan, or hand the car back and pay nothing more. At this stage many people choose to hand the car back and get another one on a new PCP agreement. Please note that you will have restrictions on how much mileage you’re allowed to clock up and that you won’t be able to sell the car while you’re paying installments.
If you want to keep things cheap, then personal leasing can be an option. It works like PCP, but you will not get the option to buy the car at any point. The leasing costs can be relatively low depending on the make, model, length of contract and mileage restrictions. With this finance method you will never own the car – you’ll simply be renting it.
Rather than getting finance through a car dealer or similar, you can always organise your own credit and use that to pay for the car that you want. If you’re buying from a dealer who does not offer finance options, or if you want to buy from a private seller, this may be the simplest option. For those who have been turned down by the banks, if you haven’t borrowed before, or if you know you have a less-than-perfect credit history, a guarantor loan may be a solution. You can borrow up to £5,000, which can go a long way if you know where to look. Even if you have a poor credit history you can still be accepted; you’ll need someone to act as your guarantor – they’ll agree to pay any loan installments you don’t make in full, although the majority of guarantors are never asked to step in as good lenders will ensure the installments are affordable.
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