Car Buying

No new car's faster than its devaluation once it leaves the showroom, but there are still plenty of ways to sever costs. This step by step guide takes you all the way from choosing the right new motor, to financing it for the lowest possible cost.

• 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

Deals on wheels

Even before deciding on the car, if you're planning to borrow, do a budget to see what payments are affordable, so you can truly choose what you want. Factor in day to day running costs and insurance when doing the sums. The more time you spend working on the real numbers, the less likely you are to be blinded by 'car lust' come the showroom visit. 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). There's more than one type of ‘new', and price differences between them can already be quite dramatic. Are a few weeks of the ultra newness worth thousands?

• New new. Totally new and ordered from a dealer.

• 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 UK, but it shouldn't be over a year old or have done more than 30,000 miles. It should be much cheaper though.
  

• Used. Opt for a used car and the savings are huge, but the number of potential pitfalls grows too. We'll leave the comprehensive used car buying guides to specialist petrolheads, like Parkers, UsedCarExpert & What Car?, but there are a few MoneySaving Used Car Buyers' Tips to consider (expands below).
  
  

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Buying a top notch used car's all about good research, so do as much as you can throughout the process. As with new cars, read reviews and price guides to work out what suits your needs in your price range, and if you're on friendly terms with your mechanic ask for recommendations. Don't be blinded by aesthetics either; by choosing less popular colours or even shapes you can save a fortune, yet get identical mechanics under the bonnet.

Once you've settled on the car you want, routinely check local newspapers, as well as AutoTrader, eBay*, Loot, & VisitCars to find the best prices. It's a good idea to check them all as often as possible, since unsurprisingly the best deals are prone to disappearing quickest.

Inspecting and checking.

If you aren't mechanically minded, ensure you get somebody who is to tag along if you think you might do the deal that day. Remember, you can never be too thorough with inspections, since any little thing you find out of place can be used as a bargaining chip to get the price down. So, always take your time; no legitimate seller will rush you if there's a good chance of a sale.

The BuyYourCar site has some handy pointers on what to check, while MSN cars offers a more in-depth guide. Do these checks before you take the car for a test drive. If you're going to spend a lot, you may want to pay a mechanic to do a full inspection for peace of mind; expect to pay around £75. You could even make the sale conditional on an in-depth check coming back clear.

Once you're happy with the physical state of the car, and you've checked it matches the documentation, the next step's to do a Cheap HPI Check. If you don't, and the car you're buying turns out to be stolen for example, you've no comeback when it's seized by the owner's insurance company.

If everything looks good, it's time to test out those Haggling skills...

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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 three types. Most quote on the road (OTR) prices, but it's worth checking.

• New Cars: Comparison Sites.

  These effectively super-shop-around for you. Enter the car's details and they zip this information to manufacturer, dealer, importer and broker sites, grabbing their data, then listing the cheapest first.

  Their money comes from lead fees, a small fee they get from the retailer when you click through to a linked site (but you'll pay nothing). The main ones are CarPriceChecker, Kelkoo* and MyCarQuotes (main dealers only).
  
  If they were comprehensive, comparison sites would be a one-stop shop, but since they aren't, and this is a sizeable transaction, try all those listed here and the brokers below. It'll take around 30 minutes, but the savings ought to make it more than worthwhile.

• New Cars: Brokers, Discounters and Importers.

  These companies have commercial relationships with various car sellers and thus set their own prices or source cheaper cars from Europe. The main ones are Autofinders, Autoquake, Broadspeed, Broker4cars*, Carquake, Dealdrivers, Drive the deal, Motorpoint, Perrys, Newcar4me, Oneswoop*, UK CarBroker. If you forced me to pick the first three to try it'd be DealDrivers, Autofinders & Perrys.
  

• Nearly New: Dealers & Private Sellers.
  
  As well as Broadspeed, Autoquake, Oneswoop, Perrys and Motorpoint, which include nearly new cars in their search, it's worth checking out your local car supermarket for nearly new cars. For better range, you can also use the powerful search facilities on sites like Autotrader, VisitCars & eBay* to restrict the results to cars under a year old, or with under 10,000 miles on the clock.
  
  The savings are usually massive here, since you dodge the instant depreciation hit that comes with a 'new new' car. Yet as there's no legal comeback, you'll need to spend extra time sorting out a Cheap HPI Check, and if possible getting a mechanic to look at the car.
  

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.

Plus, these websites aren't all doing the same thing; there are fine differences between 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:

• If you're buying from an importer, check everything, including whether it's an EU or non-EU import, the warranty situation, breakdown cover and whether the car is left or right hand drive.


• 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 dealership to buy the car.


• Those confident to buy online can then consider a price beating site like Autoebid*. 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.
  

A note on solvency

In both cases above it was possible to save around a third off the list price with very little effort. Yet I chose the cars above based on popularity and the current trend for good economy; you can expect even bigger savings on gas guzzlers.

Advertised prices for cars and accessories should be seen as a starting point for negotiations; you're entering a haggler's world as palpably as jetting off to a dust-swept country's bazaar. Now you're armed with the web's top prices, try to make dealerships compete with each other, and if they won't, consider buying online.

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 June, and while it's less important these days, avoid the registration change period.


• 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, and Kia, which offers an unparallelled 7 years on some models. It's conditional on having a service at designated times. Try to get dealers to include their extended warranties after the manufacturer's ends; they're not as good, but they're still worth having.


• 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.
  
  
• Loads more haggling tips. Gem up on the full Haggling guide for many more techniques.

Got a haggling tip to share? Add it to the discussion

New Car Haggling

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:

• 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 9% APR the total interest is £1,200.

  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 9% flat rate, the total interest is £2,250.

  Hence 9% sounds cheap but is roughly equivalent to a costly 18% APR, so if in doubt ask “what's the total I'll repay including all charges?”
  

• 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. PPI misselling's been rife, so read the Reclaim PPI article if you've been stung by this.
  
  
• £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, and some have the advantage of section 75 protection, but most people with a good 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.

• Use a cheap personal loan. These are a simple and cost effective way to borrow, for full details read Cheap Loans article.

• 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 often still the cheapest way.

• Use the dealer's 0% finance. If it's a genuine interest-free 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.
  

Your rights.

Buy your car from a dealer and you're covered by the sale of goods act 1979, which regulars will know as the SAD FART rights. Goods must be Satisfactory Quality, As Described, Fit for purpose, And last a Reasonable length of Time. If you've bought a car that turns out to be faulty or misdescribed, you've a right to reject it, but only for 'a short time after purchase'.

Buy private, however, and your rights diminish significantly. Here it's up to you, as the buyer, to determine whether the car's of satisfactory quality before you hand over the cash. Plus, while you still have a right to the car being 'as described', it's unlikely you'll get very far pursuing most private sellers based on an unsatisfactory description, so be vigilant when doing your checks. For more information about buyers' rights, read the full Consumer Rights article.

Additional Section 75 protection

If you part-pay (anything over £100) for your car with a credit card, you'll also get section 75 cover, which means in the event the dealer goes bust, you can reclaim ALL the cash.

This also applies to some finance companies, as long as the finance is linked directly to the car, and the credit agreement is regulated by the consumer credit act (it should say so at the top). For more information on this, read the detailed Section 75 guide.

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.