Buying a new car? Check out our checklist
After investing in a home, buying a new car is probably the second largest purchase you will ever make. Understandably you’ll want to consider it carefully to make sure that you get exactly the right car for your money.
The trouble is you have so many different things to consider when buying a new car, from size to fuel economy, environmental impact to depreciation, road tax to finance. Not to mention all those personal aspects of buying a new car, like make, colour and style.
Think about how you want to use your car
Before you start to think about the details of where to get your car from, or how to pay for it, you will want to think carefully about why you want a car and what you want it for.
- Are you a small car, low mileage driver? If you are just intending to make regular short shopping journeys, doing the school run, and dropping the kids off at their friends’ houses then you may need nothing more than a small economical hatchback. Choose the right car with low emissions, and you could end up paying no road tax at all.
- Do you travel long distances regularly for work or pleasure? If you rack up a substantial number of miles, you may be prepared to sacrifice the tax savings to gain that extra bit of cruising power – and comfort – for the motorways.
Think about how long you want to keep your car
Most people tend to keep a car for at least three years, often longer, so it makes sense to have a long-term view to make sure the car you choose will suit you for more than a few months.
- What about the family? Consider what you need to do in your new car, and what your family needs are. Your kids may fit easily into a small car now, but they will soon grow, join sports teams and need taking off to university, all of which will make ever increasing demands on car space.
- What about your work? Do you need your car to go to meetings with clients/work colleagues? Even if you aren’t eligible for a company car, having one that looks smart and presentable is sometimes important.
What about your leisure time? If you have a burning ambition to take up surfing or antique dealing, a big boot or a hatchback, or even an estate car might be a good idea.
Will you buy new or second hand?
- Buying new: depreciation and the dreaded VAT. When you are buying a brand new car, you need to think about what it will be worth in a few years when you are buying again. Remember, thanks to VAT, you will lose 20% of what you pay the minute you drive a brand new car away. How much more you lose on buying a new car varies from make to make, with Vauxhall topping the Auto Express list of highest depreciation, with the Zafira retaining just 29.2% of the list price after three years and the Insignia and Astra also in the top five. By contrast, the Audi Q5 retains an impressive 72.5% of its list price after three years.
- Buy second hand instead? Depreciation figures, as well as the loss in VAT, might make you reconsider buying a new car at all. There are clearly a lot of great value nearly new cars available.
Think money: financial checklist for car buyers
- The first step in buying a new car is to set your buying budget. This not only includes how much deposit you can put towards buying a new car, but also how much you can afford to pay per month, and how much extra you are prepared to pay in finance charges for buying a new car.
- You’ll also need to consider the running costs. Repairs, fuel, washing, replacement tyres and servicing. Fuel economy will be an ongoing cost when buying a new car, so you should ensure that you have all the figures to accurately compare the running costs from different dealerships.
- The regular annual costs of running a car: insurance and road tax. The cost of insurance will also be a consideration when buying a new car, and you should get quotes online before you commit, as these can vary widely between makes and models. Smaller engines and lower fuel consumption mean lower road tax. Remember that the cheapest quote isn’t always the best quote. Ensure to read keyfacts and policy documents so that you know what the insurance will cover and more importantly not cover as not all insurance policies are the same.
- Will you pay for your new car with cash, up front? Once you have set your budget for buying a new car, you’ll want to find the best possible deal. The cheapest way of buying a new car is to pay cash, in full, on the spot. This means there will be no finance charges to pay and you will own your car from day one.
- Will you need a car finance deal? Unfortunately, most of us are not able to stump up large amounts of cash when buying a new car; we need to find a good finance deal. Many dealers will offer 0% finance when buying a new car, but this may only apply if you have a large deposit or a substantial trade in value on your old car. You should also be careful not to let a good finance deal override your other priorities when buying a new car, as you may still lose out in the long run. A good deal on a car that you don’t really want isn’t really a good deal at all.