A car, much like a girlfriend (or boyfriend), is especially exciting when new. There's something about the smell of unused faux leather (the car not the girlfriend) that's particularly pleasurable. Car marketeers play on these sensual feelings, to shift focus from the price, yet a few steps can swiftly sever new car costs.
 Step 1: Know what you want and can afford Step 2: Benchmark the price Step 3: Take the best price and haggle Step 4: Financing it Step 5: Sort out the add-ons Related articles/Discuss this article |
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Even before deciding on the car, if you're borrowing, do a budget to see what payments are affordable, so you can truly choose what you want. See the Free MoneySavingExpert budget planner.
Then choose your vehicle at the right price level, using magazines and websites like What Car, Glass's Guide or Parkers and do a proper test drive (a full day). And there's more than one type of ‘new', and while it's commonly understood, it's uncommonly acted upon, that no car's as fast as its devaluation once it leaves the showroom. Are a few weeks of the ultra newness worth thousands?
- New new. Totally new and ordered from a dealer.
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Pre-registered new. It's been registered, as is, with the DVLA, so you can't choose colour or the spec. However as it's roughly £1,000 cheaper it's worth asking for. Though do check when it was registered and whether you'll get the same warranty terms.
- Nearly new. The definition's unregulated in the
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Online isn't necessarily a place to buy, but is a must-step to benchmark the lowest possible price; websites divide into two types. Most quote on the road prices, but it's worth checking.
- Screenscrapers.
These effectively super-shop-around for you. Enter the car's details and they zip this information to manufacturer, dealer, importer and broker sites, literally ‘scraping' the data off the screens, then listing the cheapest first.
Their money comes from lead fees, a small fee when you click through to a linked site. The main one is Moneysupermarket* and though technically not a screenscraper Kelkoo* produces similar results. - Brokers, Discounters and Importers.
These companies have commercial relationships with various car sellers and thus set their own prices or source cheaper cars from
Though if you forced me to pick the first three to try it to be Moneysupermarket*, DealDrivers, Autofinders. It's also worth noting that Broadspeed, Oneswoop and Motorpoint include nearly new cars in their search. Of course it's worth checking out your local car supermarket for nearly new cars as well.
If you do fancy buying online
If you're considering buying online, rather than just sourcing a benchmark price for dealer haggling (in which case jump to the next step) it's important you check every single element of the information when doing comparisons, as each company will have varying conditions and standards.
It's also important to understand these websites aren't all doing the same thing, there are fine differences betweens importers, brokers, independent suppliers and franchise dealer suppliers; in terms of who supplies the car, the conditions, and the credit risk you're taking. That's a little beyond the scope of this article, but here are a couple of pointers:
Franchise dealer discount suppliers, such as Broadspeed, are one of the safer bets as they are effectively an additional advertising route for dealers who don't want to cannibalise their own custom, and you're then passed on to the delearship to buy the car.
Those confident to buy online can then consider a price beating site like Autoebid*, included by Moneysupermarket*. Here you agree to buy, providing the price it finds beats your specified maximum, and then dealers compete for your custom. Its fee is £100 to £300.
| How the web's cheap car sites stack up for three typical cars | |||||||||||
| Pre-reg? |
Skoda Octavia |
Vauxhall Vectra | |||||||||
| Price |
Rank |
Saving |
Price |
Rank |
Saving |
Price |
Rank |
Saving | |||
| Moneysupermarket* |
YES |
No result |
No result |
£14,970 |
1 |
£5,320 | |||||
| Kelkoo |
YES |
No result |
No result |
No result | |||||||
| Newcar4me |
YES |
No result |
£14,320 |
5 |
£1,695 |
£15,130 |
3 |
£5,160 | |||
| DealDrivers |
NO |
£11,730 |
3 |
£1,110 |
£13,700 |
2 |
£2,315 |
No result | |||
| JamJar |
NO |
£11,940 |
5 |
£900 |
£14,840 |
8 |
£1,175 |
£15,690 |
5 |
£4,600 | |
| Broker4cars |
NO |
No result |
£13,340 |
1 |
£2,675 |
£15,280 |
4 |
£5,010 | |||
| Oneswoop (1) |
YES |
£11,960 |
6 |
£880 |
£14,680 |
7 |
£1,335 |
£17,230 |
8 |
£3,060 | |
| UK CarBroker |
YES |
No result |
No result |
No result | |||||||
| Broadspeed (2) |
YES |
£11,440 |
2 |
£1,400 |
£14,330 |
6 |
£1,685 |
£16,930 |
7 |
£3,360 | |
| Autofinders (1) |
YES |
£11,290 |
1 |
£1,550 |
£13,890 |
4 |
£2,125 |
£14,990 |
2 |
£5,300 | |
| Drive the deal |
YES |
£11,830 |
4 |
£1,010 |
£13,740 |
3 |
£2,275 |
£16,500 |
6 |
£3,790 | |
| Motorpoint |
NO |
No result |
No result |
No result | |||||||
| Buy your car |
NO |
£12,080 |
7 |
£760 |
No result |
No result | |||||
| (1) Delivery not included/not available (2) Pre-registered prices | |||||||||||
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Car prices and accessories aren't fixed; you're entering a haggler's world as palpably as jetting off to a dust swept country's bazaar. Yet now you're armed with the web's top prices, try to make dealerships compete and if they won't, consider web-buying.
Haggling rules aren't hard and fast, but here are some basics:
- Trade-ins aren't MoneySaving. Trading in your current car may save hassle, but it's likely you'll get better value selling separately.
- Let them know you've done the research and play dealers off against each other.
- Timing is important. The month's end is prime time as dealers have targets to meet (the March, June, September, December quarter end even better). Counter-seasonal buying is good too, convertibles can be cheaper in December than
- Walk away the first day. Take time to consider, good sales people can imbue a hot, sticky ‘I want' mentality. And if you get ‘car-lust' take a sensible friend to keep you calm.
- Check the warranty. This is the manufacturer's promise to pay for repairs, the standard in the UK is three years, except Hyundai which is five. It's conditional on having a ser
- Don't talk finances till you've fixed the price. Letting the dealer think they may be able to sell you their profitable financing, may make them sweeten the deal.
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Sadly, saving up, then buying on a preloaded cashback credit card (Read Best Cashback Cards) isn't a reality for most. Therefore cutting the cost of borrowing is important too. Borrowing costs increase with the size, length and interest rate of the loan and from insurance add-ons. Stretching the length is often costlier than increasing the rate.
Dealer Tricks
Watch out for dealers' tricks, not easy as they can make more on financing than the car:
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Flat Interest Rates. If the three little letters A, P and R don't follow the rate… danger! The APR interest rate, that banks use, means the rate is charged on any outstanding debt. Borrow £5,000 over 5 years and by the last year you only pay interest on the amount remaining, say £1,000. At 6% APR the total interest is £800.
With a flat rate the interest is charged on the original amount borrowed, no matter what's been repaid, so in the last year you still pay interest on the whole £5,000. With a 6% flat rate, the total interest is £1,500.
Hence 6% sounds cheap but is roughly equivalent to a costly 12% APR, so if in doubt ask “what's the total I'll repay including all charges?”
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Watch for PPI. Payment Protection Insurance costs aren't included in the interest rate, and many cheap loans are profitable due to their expensive insurance, again always compare based on total costs. (See Ditch Loan Insurance article).
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£53 a week, cheap innit? You pay monthly, so why do they quote weekly? Multiply the weekly by 4.33 for the monthly payment (i.e. £53 becomes a whopping £230/month). Worse still, the repayments are sometimes quoted on extended borrowing; £53/week for seven years means a massive £19,300 total cost.
The Cheapest Options
Hire purchase, clever personal contract plans and part payment exchanges often look appealing, but most people with a reasonable credit history will find avoiding dealers' finance is cheapest.
Still, don't overstretch yourself, you'll regret it later. Borrow as little as possible, using any savings to minimise the amount, and repay as quickly as feasible, Budgeting to calculate your affordable monthly repayments.
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Use a cheap personal loan. Currently loans are around 6.5%, including Moneyback and Barclaycard. These are a simple and cost effective way to borrow, for full details read The Cheapest Personal Loan article.
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Put it on a 0% credit card. If you only need a few thousand, have a good credit score or can repay quickly, a 0%, or combination of 0%, credit card(s) is the absolute cheapest borrowing. A number of cards offer over 9 months introductory 0% deals on purchases (see Best Card For Spending article). When the 0% period ends, simply transfer any remaining debt to a 0% balance transfer offer card (See Best Balance Transfers article). This should only be done if you're financially on the ball.
Admittedly, not all dealers accept credit cards, and some that do charge 1% or 2% fees for using them. Even with that though, it's still the cheapest way.
- Use the dealer's 0% finance. If it's a genuine deal as opposed to 0% for a year followed by ‘normal' rates, and you don't want any expensive PPI, it's a good deal. It's possible the vehicle price will be higher if you get 0% finance, so check the price without it and see if the borrowing cost would be less than the difference.
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Assuming there's no free insurance included (not a big deal for older drivers, but great for younger ones) then this and breakdown recovery is probably needed too. Don't be led by dealers here, their suggestions may involve their own commercial relationships.
For full details on how to do this read the Car Insurance Cost Cutting System and Cheapest Roadside Recovery articles too.
Ask a Question/ Forum Discussion
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