Freelance financial journalist and former deputy personal finance editor of the Telegraph and the Daily Mail.
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There are more than 28 million cars on the UK's roads – and last year, Britons bought more than two million new cars – the highest figure for more than four years.
Buying a car can be a necessity, particularly for those who live outside a city or drive to work. And for most people, a car is their second largest purchase apart from property.
However, unlike property, there is little potential for profit: unless you have bought a classic or rare car, the resale value will be substantially less than the purchase price.
Here's how to make sure your wheels fit your lifestyle and your wallet.
Wheels that fit your lifestyle and wallet
If you drive at least 15,000 miles a year a diesel car may work out cheaper over time thanks to better fuel efficiency. They are cheaper to tax and tend to hold their value better. However, diesel costs more than petrol at the pumps; a recent report by Which? found that in most cases, petrol models will be cheaper; and it could take as much as 14 years until a diesel model works out more cost efficient than the equivalent petrol.
It's a good idea to research the relative costs: online calculators, such as which.co.uk, can help.
Diesel vs petrol
The greener option is an electric car. And although it's more expensive to buy, it will be cheaper to own, as it escapes both vehicle tax and city congestion charges.
But you can't drive more than 100 miles a day and will need off-road parking or a garage to charge the car every night as there are only about 1,300 public charging points across the UK. However, the initial cost can be offset by the Plug-in Car Grant.
Hybrid cars improve fuel economy by around 25 per cent and you'll pay less tax. They have two sources of power – typically an electric motor powered by batteries alone at low speeds, with a conventional engine kicking in under brisk acceleration or at high speed.
A car will depreciate more slowly if its mileage is low – less than 10,000 a year – and if it has a full service history. Keeping a car in good condition is important: have it valeted regularly, keep it in a garage if possible, use a manufacturer-approved garage for servicing and repairs and keep the service record up to date, particularly for older cars.
The Porsche 911 Carrera Cabriolet (£81,727) depreciates slowest according to figures from CAP published by Auto Express in August 2012 – while the biggest depreciator is the Volvo S80 (£29,270). Other slow depreciators include Mercedes, Audi and BMW. Even the best cars depreciate fast: up to 50 per cent depreciation in three years is seen as good, while more than 80 per cent in three years is seen as poor.
Which cars depreciate the fastest?>Offer cash or target a dealer just before the new registrations start every March and September.>Buy a demo model at much better prices than new – they have only a few miles on the clock.>Ask for added extras, such as free servicing and insurance.>Consider a bank loan – you may get a better rate than a car dealer's finance package.>A personal loan will give you the flexibility to shop around for your car.>0 per cent deals from dealers often require a large deposit.>Monthly repayments are low for personal contract plans – and you don't need to put down a large deposit. However, you'll have to pay the balance or sell the car at the end of the term.>Consider leasing a car, as you can pay a fixed monthly cost and some deals offer inclusive servicing.
How to cut a deal with the dealers
Try these tips to bag a forecourt bargain
Buying second-hand can make financial sense. If you have seen a car you like, check if the price tag is fair by using websites such as whatcar.com. If you buy a car from a dealer, there should be a warranty. Cars from private sellers are likely to be cheaper but you do need to take more care; it's advisable to have them checked out by a professional mechanic – theaa.com or rac.co.uk.
Forty-year-old journalist Rachel planned to buy a four-year-old used car from an authorised dealer for a major car brand. But despite the fact that it looked immaculate, and the salesman did his best to dissuade her from having it tested, she was told by the AA that it had been in an accident and had had extensive repairs.
"The salesman told me the AA regularly checked their cars and that it had already checked and passed the one I wanted – clearly that was wrong. They even faxed me a signed form to ‘prove' that it had been tested."
It's also important to check you're not buying a car that's been stolen or has an outstanding finance agreement on it: sites such as hpicheck.com offer this service.
By law you have to insure your car – but that doesn't mean the bill needs to be large. It's not all about the headline premium, though. If you are involved in an accident, your claim experience will become very important to you.
There are several ways to cut your motor insurance costs. For example, you could opt for a larger excess on your policy and make sure your insurer knows if you will have low annual mileage, only use the car for leisure or park the car in a garage or off-road. But not paying the extra to protect your no-claims bonus could be a false economy if you're involved in an accident.
Mary, a 40-year-old writer who had not had an accident in 20 years of driving, went into the back of another driver at a roundabout. Although the damage to the other driver's car was minimal, Mary's premiums rose substantially when she came to renew. "I'd never thought about protecting my no-claims bonus: it just seemed an unnecessary expense", she says. "Now I always do so: it only costs a little extra."
Harriet, a 62-year-old artist, found a note on her windscreen from a driver who had crashed into her parked car. "I was impressed with her honesty – but I was even more impressed with her insurer," she said. "My own insurer was less than helpful, even though the accident wasn't my fault. Hers couldn't do enough for me. I'm going to switch as soon as I can."
Insurance for young motorists
Our top tips
The average car insurance premium is £789 for all drivers but the higher accident rate for young motorists means that for those aged 17 to 22 it is £1,858. Women used to pay less than men for insurance, but a change in the law last year stopped insurers setting premiums according to gender.
Young people can cut car insurance costs by opting for smaller, cheaper cars, going to insurers with special young driver schemes – or by using 'black box' schemes which monitor how they are driving at all times.
Never put yourself down as the main driver on your teenager's car – it's called 'fronting', is illegal and you could be prosecuted.
Little known car factsAvailable in any colour…
The first mass-produced car, the Ford Model T, went on sale in 1909 for $850: the equivalent of $20,513 today (£13,575). It was available in any colour so long as it was black, said founder Henry Ford.Biggest price tag
The most expensive car you can buy today is the Bugatti Veyron Super Sport with a price tag of $2.4 million (£1.58 million).Petrol prices compared
Norway has the most expensive petrol in the world – Britain comes in 10th place – and Venezuelans pay just 1p a litre for petrol.You're never too old
Twenty Britons aged 80 or above took their driving tests for the first time last year – five passed.Fraudulent claims
Bogus insurance claims cost honest drivers £541m in 2011, according to the Association of British Insurers. One motor accident gang was involved in 180 staged accidents, linked to 230 insurance claims which were worth £3.2 million.The oldest
The oldest Briton to pass a driving test is thought to be the late Lord Renton, who passed just before his 95th birthday.Multiple fails
A woman from Essex has failed her theory test 105 times – costing her more than £3,000 in fees.
The views expressed here are solely those of the author,
and do not necessarily reflect the views of M&S Bank.