Buying your Perfect Car
Each year car buying peaks around the arrival of the new number plates that start appearing on the roads after March 1 and September 1. So if you're in the mood for a new car, now is the time to start looking and deciding what you need – and to start planning the finance.
What do you want?
The choice in cars has never been wider, but getting the right one needs savvy financial sense as well as that gut emotional response.
There is obviously no sense in lusting after a Ferrari if your personal or family needs dictate an entirely different type of car, with a lot less flamboyance and a lot more accommodation and practicality. Your heart may crave a Lamborghini, but your head says something entirely different – a luggage–filled Land Rover with a row of child seats and a dog in the back.
So first define your needs: number of seats, need to carry young children or older relatives, how much boot space you want, how adaptable you need the interior to be, whether your daily motoring will be mostly around town or up and down a motorway. Sporty and low–slung, or tall and practical?
Sporty and low–slung, or tall and practical?
How much power do you need and what type of fuel do you prefer? Petrol or diesel, electric or hybrid, manual or automatic? If you do a lot of miles, a higher–mpg (miles per gallon) diesel may well be the most economical option. But a diesel will cost more to buy, and may not be the best choice for continual low–speed urban driving. For a short daily commute, an electric car makes sense and is handily exempt from the London congestion charge, but far from ideal when you want to do longer distance weekend trips or go away on a family holiday. If you do a lot of urban driving, consider an automatic to lower the stress level.
Petrol or diesel, electric or hybrid, manual or automatic?
How to choose a model
First make a shortlist of models that catch your eye, but stay sensible. Be realistic about what you need the car to do. Here we look at some of the best models to suit the kind of life you lead:
- City dweller
- Small and nippy will suit you best. If you rarely go out of town, consider getting an electric car: good practical ones that drive well are the Renault Zoe and Volkswagen e–up! They are easy to park and congestion charge exempt. Or look at a small hatchback with an auto gearbox, such as a MINI.
- Long commute
- Spend a lot of time in the car every day? Comfort and connectivity are key. Good seats with lots of adjustment and Bluetooth for your mobile are essentials. An increasing number of cars also have on–board WiFi – including traditional executive candidates like Mercedes, Audi, but also models from carmakers like Toyota. Choose a diesel for high mileage economy.
- Younger driver
- Style comes higher on the priority list than space, but insurance cost is also a consideration. Take a close look at Britain's bestselling car, the Ford Fiesta. The new model has an innovative central display, voice command and is great to drive. Go for the version with a peppy one–litre petrol engine.
- Big family
- You are spoiled for choice among seven–seater people carriers, 4x4s and estate cars. Some of the best are the Ford S–Max, Land Rover Discovery and Citroen Grand C4 Picasso for their blend of roominess and versatility.
Take a test drive
- Always ask for a test drive – try as many as possible from the shortlist.
- Look, listen and feel. Can you get comfortable in the driving seat, is it easy getting in and out, can you live with the levels of engine, wind and tyre noise? Do you enjoy the driving experience?
- Ask about what's included in the standard price (don't be wooed by what may be options – find out what costs extra).
- Don't forget to compare the length of warranty on all the cars on your list – it can vary from three to seven years.
- Ask about the CO2 emissions output and insurance group; they can make a big difference to the cost of ownership.
Look, listen and feel. Do you enjoy the driving experience?
Ways to buy
- Dealers often pre–register cars to meet manufacturers' sales targets. These can be a good buy, saving a chunk of money, but the discount must be worth it. Yours will not be the first name on the owner's document. Remember too that a car bought after the 1st March, 1st September and after the New Year will be worth more – possibly hundreds more – than the same car registered a few days earlier, but with an 'old' number plate.
- From the moment a new car exits the showroom, its price falls, and the drop is steepest in the first couple of years. Buy secondhand to avoid that big hit of depreciation, but for peace of mind go for something that still has time to run on the warranty, or comes with a dealer used car warranty. Buying a second–hand car privately can be a minefield. Look carefully at the service history, which should be full and continuous. Check carpets for wear, the engine for signs of oil leaks, tyres for worn tread. Invest in an HPI check to ensure that the car hasn't been stolen, or declared a write–off, and has no outstanding finance deal.
- Trade in?
- It depends. You probably won't get as much for your existing vehicle as if you sell privately, but a trade–in is a lot less hassle. Check out what different dealers will offer for your car, and also ask what discount on the new (or newer) car they'll give you with no trade–in. Ask yourself if you have the time and energy to sell your old car privately. If you have, it's probably worth doing.
Buy secondhand to avoid that big hit of depreciation
The finance bit
What is the best way to pay for a car? Here are some of the options.
If you have the money set aside you might be in a position to buy your car outright. But it is a big chunk of money to commit all at once, so you might prefer to spread the load and keep a buffer for something else.
Add a package deal
Some manufacturers have special deals to package all the car's servicing during the warranty period for one up–front price, and that is well worth considering as it is usually good value. One company, Peugeot, has a monthly payment scheme that covers everything except your petrol or diesel. Called Just Add Fuel, it includes finance, servicing, repairs and even insurance – which is useful if you are young and might otherwise face higher premiums. But, like with hire purchase and dealer finance, remember to check the APR on any finance package.
Most car dealers have finance schemes to help you spread the cost of purchase. It is tempting and convenient to do everything at once while you are in the showroom, but it is not necessarily the best option. Check out the cost of a personal loan through a bank or other provider, to compare with what the dealer offers. Remember, dealers make a profit on a loan – so if you take one, haggle harder for more off the car's price.
Check the APR on any finance package
You pay an initial deposit, then monthly payments, and you don't actually own the car until the final payment is made. If you want to sell the car before that happens, you must first settle the outstanding finance. HP can be a good way of spreading the cost, but of course you are likely to pay more overall. Shop around for the best deal, because the details will vary.
Personal Contract Purchase
This works similarly to hire purchase, but the deposit may be higher and monthly PCP payments are typically lower than on HP. The value of the car at the end of the contract is agreed in advance. So is the mileage you are allowed to do, and exceeding it will incur extra cost. The contract is usually over three years, and a typical example for a car costing £20,000 would be a down–payment of, say £6,000, 36 monthly payments of £250, and a final payment of £5,000.
At the end of the contract there are three options:
- Settle the final lump sum ('balloon') payment and the car is yours.
- Use the 'balloon' payment as a deposit on a new car and fresh PCP.
- Hand over the car with no final lump sum payable.
How to haggle – and get a bargain
Do your homework. Arm yourself with knowledge. Search online and get up to speed with comparing prices and specifications. Check out what you should aim to pay by looking at the target price in the back pages of WhatCar? Wait to do your showroom shopping later in the month when dealers are keen to meet sales targets.
Haggling doesn't come naturally to most of us, and you'll be up against a car salesman who does this for a living. Don't just chase a discount at one dealership, ring around a number of dealers for the best price, this can help you to get a better bargain.
Don't just chase a discount at one dealership
Last steps and useful links
Don't forget, once you've made your decision you'll need car insurance before you're ready to get on the road.
The views expressed here are solely those of the author,
and do not necessarily reflect the views of M&S Bank.
First published 28/02/2014 Updated 16/06/2016