The
right way to buy a car
by Jason Hulott
Your
no-nonsense guide to getting the right car at the right price.
Buying
a car can be quite daunting. With so many makes, models and finance options
available and other decisions, it can be difficult to find the deal that
leaves you 100% happy.
However, the following pointers should help you make an educated decision
when buying a new or used car.
Where to buy?
There
are number of ways to buy a new or used car – a car dealership isn’t
your only option. For example, there are independent dealers, importers,
brokers, auction, online, car supermarkets or privately.
Here
we weigh up the pros and cons of each of them:
Car
and Independent Dealers
Using a dealer to buy your new or used car can be convenient as you can
have a test drive and the salesman should be more versed in the car details
as compared to say buying a car from a broker, or by buying a car online.
Dealers
will offer deals such as free insurance or low-rate finance. January –
traditionally a very slow month for car dealers who offer extra specials
incentives to try and get your custom - is also a time where you may be
able to snap up a bargain.
Most
new cars come with a two or three warranty (most with breakdown cover
included as well for the same period).
If
you have a car to part exchange, the car dealer will normally take it
as part of a deposit, which means it is off your hands without the hassle
of trying to sell it privately. However, do bear in mind that you will
not get full the market value for it.
However,
the downside of buying from a car dealership is that their prices can
be higher than elsewhere as they need to cover the cost of the showroom
and staff.
And,
if there aren’t any finance incentives at the dealership, choosing
their finance scheme will be, in most cases, expensive.
Importers
If you a buy a car in from Europe, you do stand to save money, though
in some cases, UK deals are increasingly competitive. Lower prices over
here and exchange rate fluctuations mean imports aren’t quite the
outstanding bargains they used to be.
Brokers
A broker is an intermediary who negotiates with a dealer on your behalf
to get you a cut-price car. Car brokers use their bulk –buying power
to secure discounts which they then pass on to the customer (after they’ve
taken their cut of course!)
Auction
You can be sure of snapping up a bargain if you buy at auction, but it
is best if you visit a few auctions before taking the plunge. Visit and
learn the ropes or take a knowledgeable friend. With Auctions, you will
get more legal protection at an auction than buying privately.
Car
Supermarkets
Car Supermarkets offer a huge choice at competitive prices. However, there
is little room for negotiation and you may get a low bid for your part-exchange
and limited pre-sales checks.
Some
car supermarkets also charge you extra for a warranty (if the maker’s
cover has expired), a history check and road tax.
Online
This process is all carried out online. You can visit a manufacturer’s
website or a specialist online car broker such as JamJar. Everything can
be completed online - finding and choosing of the car, the specification
options, finance options, delivery details, and, in some cases even part
exchanges.
The
disadvantage to this service that you can not test drive the car.
Privately
Buying privately is a risky way to get a car as you have very little legal
protection should anything go wrong. Many dealers masquerade as private
sellers to duck their legal responsibilities, so always check that the
log book details match up.
Always
take someone who knows about cars along with you and always view any private
car in broad daylight when any dinks, dents and damage are visible!
Financing
your new car
Once
you’ve decided where to buy your next car, you need to think about
finance.
Very
few of us buy a car with cash, and borrowing money is the only option.
However, there are so many different types of finance to choose from,
it can be difficult knowing which is the right one for you.
Hire
Purchase (HP)
HP is where a deposit is followed by regular monthly repayment. However,
the car is owned by the finance company until the loan is repaid. So,
if you fail to maintain the finance payments you could lose the vehicle.
Hire
Purchase is fairly easy to obtain and widely available, and with it you
also get additional protection under the Consumer Credit Act
Personal
Loan (as opposed to Manufacturer’s finance)
A personal loan is probably the cheapest way to buy a new or used car
as personal loan providers tend to offer lower interest rates than traditional
other car financing methods. Also, as you are classed as a ‘cash
purchaser’ (because you already have the finance in place) you are
in a strong position to negotiate a good deal.
As
the loan will not be secured on the vehicle, the car is owned outright
by you.
Manufacturers
schemes
These are offered by manufacturers, dealers, finance companies and some
banks for the purchase of new or nearly new cars.
More often than not, you will be paying interest at a higher interest
rate than that offered on a personal loan.
With manufacturers schemes, you can part exchange your own vehicle and
may also need to make a deposit. You will then have a finance agreement
for the remainder of the cost of the vehicle. As with HP, if you do fail
to keep up the repayments on the vehicle, it may be repossessed.
Personal
Contract Purchase (PCP)
PCP schemes available from car dealers as well as banks. You pay a small
deposit and a set amount of monthly payments. When the contract ends,
you have three options:
•
you can hand the car back and owe nothing,
• you can pay the balance (which, in any contract you sign, will
be stated as the Minimum Guaranteed Future Value) and keep the car,
• you can trade it in for another, and begin a new PCP.
PCPs
are best for people who like a new car every two or three years. If you
are looking to keep a car long term, then personal or hire-purchase loans
will be cheaper.
By
now you should have a good idea of where to buy your car from and how
to finance your purchase. Here are…
Ten
top tips on what to do when buying …
….
from a car dealer or broker
•
Do your research first – get a good idea of what car you want and
how much you are prepared for pay for it and stick to the price
• When the salesman asks you what your budget is, always come in
at least £500 under what you are really prepared to pay. Salesmen
will always add £500 on top of your budget because by the time you
are sitting down and talking about figures with him or her, it is obvious
you really want the car and will find a way to finance the ‘extra’
£500
• If you are part exchanging your vehicle, check out it’s
value somewhere like Parkers Price guide. While you will never get 100%
market value on your p/x from a dealer, at least you have a rough figure
as to what it should be.
• Always be confident, polite, but firm. You are likely to get a
better deal if you come across as someone who won’t be messed about
with!
• Consider buying an ex-demo. These are normally no older than three
months’ old, but you can expect to get up to 15% off the new price!
…..
privately
• Always take someone with you to give a second opinion –
two pairs of eyes are better than one and go during broad daylight so
that any scrapes or dents will show up
• Always meet the seller at their house so you can check they are
genuine and that all documentation tallies up
• Test drive the car and listen out for any noises, as well to check
that there are no ‘blind spots’ and that the car feels comfortable
• If you feel the car is right for you, arrange to have an independent
survey carried out by one of the motoring organisations. This will highlight
any flaws or potential problems.
• Always be confident, polite, but firm. You are likely to get a
better deal if you come across as someone who won’t be messed about
with!
About
the Author
Motor
Car Loans an automotive resource guide for those looking to buy, insure
, sell or in fact do all most anything with a car. Sign up to our free
car insurance course, send an email to motorcarloans@getresponse.com
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