If you can afford to shell out for a new vehicle there are great bargains to be had - we explain why you need to weigh up your options and drive a hard bargain so you get more metal for your money.
Buying a new car is a serious investment - for most people, second only to buying a home.
As ever, when parting with large sums of money, it’s important to make the right decisions. That means considering all the options available to you, first to pick the right car and then to drive a hard bargain. So what are the most important things to bear in mind when buying a car straight off the forecourt?
Is brand new the best option?
It’s well established that buying brand new is an expensive option – not just because of the initial outlay, but also because of future resale value. The average brand new car will lose up to 20% of its value the minute you drive it away from the dealership.
Before you settle on brand new, there are other options. For instance, pre-registered cars are all but brand new, usually with 20 miles or less on the clock. Dealers register these cars themselves in order to meet sales targets, then sell them straight off the forecourt at discounts of up to 20% - and you still get all the warranties you’d get from buying brand new.
However, if you are dead set on a brand new car, then it is important to consider resale value. Before you buy, look at second hand prices to get an idea of what your shiny new car will be worth in a few year’s time – clearly it is better to invest in a car that will hold its value relatively well over time.
- Investigate pre-registered options
- Look at resale values to work out how well each car holds its value over time
Be clear about what you need and what you want
It is important that you do your research before setting out to buy. Work out what you really need, for instance based on your driving habits and the size of your family. There are lots of issues to consider here, bearing in mind that, on the whole, the bigger a car is, the bigger the price tag will be – and that’s before you even get into insurance and running costs. Some key considerations should be:
- How big does the car need to be? Think in terms of seats and boot space, but don’t ignore overall size if, for instance, you have a garage
- How will you use it? Your driving habits and average annual mileage will affect running costs, and therefore your choice of car – for instance whether you go or a diesel of petrol engine. whatgreencar.co.uk offers a wealth of data on the fuel economy and overall running costs of most cars on the market.
- How much will it cost to insure? You can usually get insurance quotes before you buy and this will give you an idea of how much insuring your new car is going to cost you.
- What kind of warranty will you get? Some manufacturers offer five year warranties, some only two. It’s worth looking at reviews online, to get a feel for things like reliability and after sales service. Don’t ignore discussion forums as they can provide a useful source of feedback from car owners.
- Identify a selection of cars that fit with your requirements, based on your research
Considering all these points should help you to narrow down the options which, given the wealth of choice available, is always a good idea. It will help you to compare a smaller set of options, based on features and considerations that are relevant to your specific circumstances.
Try before you buy
Once you have narrowed down the options, make sure you test drive them all. The end of the day, buying a car is not only about analysing the options and making a logical decision. If you are going to spend all that money, you want to get a car that you enjoy driving and that is comfortable. The only way to judge this is to try them out.
Ideally, visit a selection of dealerships to try out all your options on the same day, making it easier to compare. Don’t let the salesman get away with taking you on spin around the block – you will learn very little from this. Ideally, try to get out of town, so you can put the car through its paces properly.
- Always test drive before you buy
- Insist on a proper drive, to ensure you can really get a feel for the car
Take some time to think about it
Remember that brand new cars, and car salesmen, are very persuasive. Don’t let that heady new car smell (or the salesman’s patter) go to your head, and don’t be pressured into making a decision there and then. Walk away and give yourself a bit if time and distance in which to properly reflect. Weigh up all your research, including prices, and the driving experience before settling on your preferred option.
Be realistic about optional extras
It is all too easy to get carried away adding extras to your car, but the prices soon add up. Do you really need heated seats, low profile tyres or a top of the range stereo? It’s very easy to think ‘what’s another £1,000’, just try not to get carried away...
Weight up your trade in options
If you are seeking to part-exchange your existing car it’s always worth shopping around a bit to make sure you are getting the best deal. If you have settle on a make and model, visit, or call a couple of dealerships to see what trade in value they will offer – then go for the one that offers the most.
- Think about the ‘cost to swap’. That is, a better trade in value for your old car is no good if the price of the new car is higher. Focus on how much money you will have to hand over once your trade in value has been deducted from the price of the new car
Drive a hard bargain
As a rule, you should never pay the full price for a new car, as dealerships will always negotiate in order to secure a sale. At the moment, there are some very good deals to be had, and you can drive an even harder bargain – you should be able to get 5-15% off the price straight away. If the dealer is not willing to negotiate, walk away and buy from a dealer who will.
What Car? lists target prices for all brand new cars – essentially, this is the price you should aim for, or seek to undercut, when negotiating on price.
- Remember that dealers are usually more willing to move on prices when business is quiet. Traditionally that is in August and December but, as things stand, any time is a good time
Look very carefully at finance options
If you can secure a 0% finance deal, then that is always worth considering – but be careful. Some finance deals will offer 0% for a limited period and then revert to a loan on which interest is payable, say after six months. The trick is always to look at the total cost of the loan over its whole life, and choose the cheapest on that basis:
- Look beyond the 0% finance option to make sure it is the best deal over the long term
- Shop around for the best rates on personal loans
Buy online
If you have done your research (including a test drive) there is no reason why you should not buy a car online.
Internet-based car brokers can often undercut traditional dealers by a further £2000 so are an option worth considering. You can find a full list of brokers by visiting honestjohn.co.uk.
- Be prepared to wait a few weeks for your new car to turn up – it will be delivered to your door
- Remember that these brokers may not be able to offer part-exchange deals
Buy an ‘outgoing model’
Another good idea is to identify a model that is about to be superseded by a new one. In these circumstances, dealers will usually be more prepared to do a deal and discounts can get as high as 30% off the list price.
Finally look at ‘service packages’
Many dealers these days offer packages that essentially allow you to pay for your first three to five year’s servicing up front (to be used once your warranty has expired). These are worth a look, since prices will inevitably go up over time if you choose to pay for services as they happen.
