Buying a New Car?

Buying a vehicle is the most important investment we make after our homes, so it is essential to temper our excitement over buying a new car with some auto-savvy insider-tips.

WHERE

Franchised Dealerships
Gone are the days when you were goaded by sheepskin-clad Del-boy dealers into buying a car with less horsepower than a motorised scooter. Today franchised dealers are obligated under strict regulations, and since 1979 the consumer has been protected by the Sales of Goods Act, now amended by the Sale and Supply of Goods to Consumers Regulations 2002.

• Benefits: One-to-one contact, comprehensive warranty schemes, opportunity for part-exchange, insurance and finance under one roof for customer-convenience, option to test-drive.
• Drawbacks: Can be more expensive, involves personal negotiation so it’s a good idea to bring along a seasoned car buyer to help you barter and ensure you are getting a good deal.

TIP: Nearly two-thirds of private new car buyers have a vehicle to trade in, so buyers - do your homework! Settling a large discount off the list price is futile if the dealer offers you a below-market price for your trade-in.

European Imports
With different trading conditions across Europe the retail prices of vehicles can fluctuate. This has prompted many British consumers to purchase vehicles abroad to save money.

• Benefits: This route can be cheaper and other countries may offer better specifications.
• Drawbacks: Savings available on new European cars depend upon exchange rates; warranty packages may be less comprehensive than UK cars; not likely to accept trade-ins; more investigation on the consumer’s part; possible problems with communication (language barrier, long-distance phone-calls).

TIP: Ensure that you opt for a “parallel import” which is a right-hand drive vehicle, built to EU Type Approval and compatible with UK specification.

Internet
From surfing the web to cruising the highway – many people are now choosing the Internet to search for vehicles.

• Benefits: you can search for the best deal at your leisure across a range of countries.
• Drawbacks: No opportunity to test-drive; the consumer must conduct extremely thorough investigations and probe the security of websites.

Auctions

• Benefits: Auction vehicles ranging from virtually new autos and rental fleets to redundant trade-ins, can generate fantastic bargains for private buyers who are in the know.
• Drawbacks: With cars showcased only for viewing there is virtually no opportunity to test-drive; no opportunity to deal with previous owners; you must pay the balance as well as the auction fee on the actual day of the auction.

TIP: Work out the specification and price range of the vehicle you wish to buy before the auction and do not get carried away with the adrenalin-thrills of bidding. It is best to take along a friend to moderate your bidding, or an experienced car buyer to help you shop around for the best auction deal. Remember: don’t ask “is this the best deal of the auction?”, but, is this the best deal on the car I am intending to buy?

Car Supermarkets
These operate by the motto ‘bulk buy – cheap trade’.

• Benefits: New, used, excess dealer stock and imports are all presented for less than you'll pay at a main dealer.
• Drawbacks: Selection is limited; car supermarkets seldom provide the after-sales support and guarantees found with franchise dealerships.

WHEN

You can get greater savings if you choose the right time of year to buy a car. Given that registration plates change bi-annually in March and September, these are the peak months during which consumer demand is high and generally the opportunity for discounts low. The months preceding these peak dates are prime for negotiating reductions, as many dealers will be keen to condense stock levels in anticipation of the plate-changing frenzy. However, with reduced prices also come diminished commercial value, as buying a car in say August rather than September, devalues a car up to £750. It is also good to bear in mind how seasonal factors affect price. In winter you can find the best deals on cabriolets and sports cars, and conversely during the summer, offroaders are at their lowest price, as grip and protection become secondary purchasing factors. It also pays to be aware of certain manufacturer’s model-launches. When a manufacturer is about to release a new model type, dealers will accordingly reduce stock levels of existing cars, thereby increasing the consumer’s opportunity to get a bargain. Evidently general awareness pays off. Become attentive to manufacturer incentives and advertised deals. These incentives may be due to sluggish sales, exchange rate rewards or over-production, and need to be exploited by the savvy car-buyer. Also observe market trends and consider buying at the end of the month. Dealerships set sales targets for their staff who then work towards rewarding incentives. If a staff member is shy of their target, he/she will be highly receptive to the negotiations of a bargaining customer.

HOW

So you have decided upon what car to buy…but the decision-making doesn’t end there. How will you pay for your new purchase?

Personal Loans
Loans from a bank or other provider should be settled in full, including accrued interest over a fixed period. The lower the Annual Percentage Rate (APR) the less interest you pay.

• Benefits: This is a competitive market and so you can shop around for the best deal.
• Drawbacks: Even the smallest of loans can be held against an asset – most notably your home, which can be seized if you fail to make your repayments.

TIP: Check whether your loan repayments include payment protection insurance. If you feel that this is important, it is often less expensive to organise protection from a different source.

Mortgages
By adding the cost of the car to your mortgage you can easily increase your monthly repayments over the home loan period.

• Benefits: This ensures possibly the lowest rate of interest.
• Drawbacks: Beware of mortgages with hefty early repayment penalties.

TIP: Investigate flexible mortgages, which accept over and under repayment.

Hire Purchase
After paying a deposit on the car, you then make monthly repayments over a fixed period (typically between 1-5 years). Hire purchase covers the cost of the car, extra fees and interest. You do not legally own the car until the last instalment is made.

• Benefits: The interest rate can be lower because the car is used as collateral on the loan.
• Drawbacks: Borrowers can have the car taken from them if they miss several payment instalments.

TIP: The dealership grosses commission on a hire purchase contract, so you should try to barter for more of a reduction on the car price.

Dealership Deals (Interest Free Credit)
You pay up to half of the cost of the car as a deposit, and subsequently make fixed monthly payments.

• Benefits: Essentially a straightforward method of loan repayment.
• Drawbacks: You need to have substantial collateral before you buy the car.

TIP: Consider selling your old car privately for the best deal in order to raise the deposit. This may amount to more than the value a dealer would accept for your old car as part of an advance payment.

Advert abbreviations

• 3DR/5DR - 3 Door/5 Door Hatchback
• A.B.S - Anti-lock Breaking System
• ALLOYS - Alloy Wheels
• AUTO – Automatic
• C/L or C/LOCK – Central Locking
• E.Seats/ E.W – Electric seats/ windows
• F/FOGS – Front Fog Lights
• F/S/H – Full Service History
• F/S/R – Factory Sunroof
• G.Cond – Good Condition
• H.R.W – Heated Rear Window
• P.A.S – Power Assisted Steering
• P/Ex – Part Exchange
• S/H – Service History
• TT – MOT’d and Taxed
• V.G.C – Very Good Condition

Inspection Guidelines.

• Always inspect a car during daylight and when the weather is fine.
• Rain on a car’s paintwork makes it appear shinier, and may conceal re-spray attempt
• Never buy a car without a DVLA document, and check that the vehicle is not owned by a Hire Purchase company – this can be verified online at www.hpicheck.com.
• Make sure you also obtain the logbook (V5), service and insurance records, MOT Certificate (on vehicles over 3 years old) and receipts for repairs.
• In the case of private sellers, check that the seller’s address correlates with the address recorded in the logbook.
• Beware of ‘clocking’: some dishonest vendors turn back the odometer to get a higher asking price. An HPI Check can identify inconsistencies, but it also pays to give the car a personal close examination. Inspect the gearshift and seats for signs of wearing to verify whether the car’s condition substantiates its mileage.