For most of us, having a car is pretty much a necessity. It’s a place where we spend a huge portion of our day, driving to and from work, collecting kids or friends, going to the supermarket; everything. In fact, I didn’t realise until I got into my friend’s car a while ago, how much time some people actually spend in their cars and how much it becomes like a second home. All the empty coke cans and McDonald’s wrappers in hers were a testament to the time she spends in there!
The process of buying a car can be a laborious, difficult, task. Do you buy it outright, do you get it on finance? Do you need a brand new model or can you survive in a second hand one? What’s the best value for money? It’s a bit of a minefield. There’re thousands of websites and experts out there who have mountains of advice, but here’re a few simple things to keep in mind when you’re thinking about purchasing.
Second-hand cars tend to be much cheaper than brand new ones. If you’re not too worried about having a car that’s one or two years old, you can really save yourself some money by buying a slightly older model. You can get really good deals on second-hand cars if you go to a reputable salesman or find a private seller. (Remember though, that because you are buying second hand it’s always worth going to look at the car with someone who knows what to look for. You need to make sure that they aren’t selling you a broken-down heap that’s going to burn out as soon as you take it over 60mph.)
In addition, if the car is only one or two years old then it most likely won’t come with the mileage and wear and tear of a much older model. It will also be within the three-year MOT grace period, meaning that you won’t need to pay for one straight away. All these factors mean you have almost all the benefits of a new car, without having lost thousands of pounds in its value just because you drove it brand new off the forecourt.
Getting a personal loan from the bank can be much cheaper than getting a hire purchase agreement. Purchasing a car is an expensive enterprise, and we don’t all have the capital to just buy a car outright. It is something you can definitely save for, and it’s great if you do manage to buy a car with cash. But, for most of us buying a car means getting a loan.
In this respect, Hire Purchasing can look very attractive. For a remarkably small upfront cost, you can drive away in a brand new car as soon as your credit is approved. The monthly costs can be very reasonable, and you don’t need to worry about how much value your car loses because it’s not yours. However, it’s worth thinking about that fact; even after paying a set cost every month for four years, that car will never be yours. The money you are paying out is purely going on hiring the car, you are not actually investing in anything of your own. You also need to be careful about how and where you drive it. Most companies, although their rates seem good, will charge you a hefty sum if you go over the agreed mileage amount, or could make you pay for minor repairs when you return it to them if it’s not in a good resale condition. Can you really be that consistently conscientious with your driving for four years?
In contrast, by getting a personal loan from your bank, then you are actually buying the car outright. That means that when you are finished with it, you have the right to change it, modify it, sell it, and take the profits for yourself. By getting a loan through your bank you can agree with them the loan amount, the repayment schedule, and the length of the loan. You also potentially have the flexibility to alter the loan at a later date with your bank; either adding it onto another personal loan or increasing the amount you want to borrow. It’s flexible and an easy to understand a way of buying a car.
Smaller engines and smaller cars tend to be cheaper to insure. If you’re buying your car to get from A to B, as opposed to going off-roading or driving seriously large and fast European highways, then it’s likely you won’t be needing a 3litre engine. Cars with a 1.2L engine are substantially cheaper to insure than even those with a 1.6L or 2.0L engine. They also tend to be more cost efficient on petrol; smaller cars means less weight to power forward. If you are all about the city and driving on easy roads, I would recommend looking at a smaller car with a smaller engine. They’re also easier to park in those tight spaces!
Finally, no matter what choice you make about your car; old, new, yours, or leased, the thing that matters most is getting a deal that’s right for you and always, always, making sure you read the Terms and Conditions of any contract you sign!