Buying a new car is a big investment, and for many people, it’s one of the most significant purchases they’ll make after a home. While it’s easy to focus on the excitement of a shiny new vehicle, the financial side of things requires equal attention. By taking these smart steps before you sign on the dotted line, you can avoid surprises, stay within budget, and choose a car that truly works for you.
Tips to make sure your next car buying experience is a good one!
Know what you can afford before you buy
Before even looking at vehicles, take a realistic look at your finances. Start by reviewing your monthly income and outgoings, debts, and how much you have in savings.
Do a budget check even if you’re financing the purchase of your car. You still need to know how much you can comfortably afford every month. Aim to keep car-related expenses to under 20% of monthly income.
Also, research your car thoroughly before you buy for reliability, performance, and the going market rate for the model. This will give you a strong position from which to negotiate the purchase price.
Spread the cost with car finance
Not everyone can or wants to buy a car outright. You might decide that a personal loan is the best way forward to help you spread out the cost.
In the UK, there are also several car finance options that you can choose. For example, if you want to change cars every few years, a Personal Contract Purchase (PCP) is a good option.
With a PCP, you pay a deposit followed by fixed monthly payments to cover the depreciation. When the contract ends, you can pay the GFV (Guaranteed Future Value) to own the car outright.
In comparison, with a Hire Purchase (HP) agreement, your monthly payments will be higher than under a PCP because you’re paying off the whole car. However, you’ll own the car outright at the end of the term.
Reliability, repairs and running costs: What to expect
A car’s price tag isn’t the only cost to consider. To avoid being hit with costly repairs or inefficient fuel usage, look into models that have a strong reputation for reliability and reasonable running and maintenance costs. Check reputable reviews to help you decide.
Understanding a car’s track record can save you stress and money. Yes, you’re buying a brand-new car. But it’s still essential to carry out an MOT history check. Buyers are often surprised at the issues that can come with pre-registered or ex-demo vehicles.
Insurance, fuel, and more: The real price of your car
Think beyond the showroom price. The true cost of owning a car includes insurance, road tax, fuel, servicing, and depreciation – and alongside the cost of living, these costs are increasing. Some cars may cost less upfront but be more expensive to run.
Compare the TOC (Total Cost of Ownership) across different models to help you choose a vehicle that’s financially sustainable in the long-term.
Your new car, without the financial stress
A bit of planning can go a long way when buying a new car. By being clear about your finances, choosing the right finance option, and researching carefully, you can make a purchase that fits your lifestyle and your budget.