Buying a car? How exciting! It’s also a minefield! The choices are endless. The only real limitation is your budget – and your insurance group.
Whether you have £1,000 or £100,000 (we can dream!) to spend, it’s a major decision. It is after all the second most expensive thing you’re ever likely to buy – after your house.
So you’ll be doing a lot of research. Firstly, decide whether you’re buying new or second hand. Here’s everything you need to help make that call.
Let’s start with the new…
New Car: Reasons to Buy
Pro: You’re in the driving seat
With a car that’s factory fresh, complete with new car smell, you can choose your exact specs: make, model, colour, engine size and all the extras! Have fun with it and tailor your car to make it a complete one-off. The advantages are obvious.
Pro: Strong warranty cover
Perhaps the biggest advantage to buying new, a good warranty gives you complete peace of mind for an extended period. Most car manufacturers will give you a three-year warranty or a mileage limit of 36,000 so if there are any faults within that time or mileage period, you’re protected.
Pro: Safety and security
Car safety is increasing as technology advances, so it’s fair to say that the newest cars will have the best safety features. And we’re talking way beyond parking sensors! Most high spec modern cars not only have sensor systems that can predict an accident, but they’ll also keep you at a safe distance from the car in front and warn you if you’re drifting out of your lane.
Pro: Incentivised finance
No deposit. Zero interest. Delayed payments. The big dealers have a range of options to sweeten and seal the deal. They can offer you PCP or Hire Purchase options that make buying much more accessible. The cheapest way to fund a new car can be to buy it outright but there are also a few reasons why most people don’t and why it’s not the best idea.
Pro: Reliable. Dependable
99% of the time, a new car will be more reliable than an older model just because of less wear and tear. All the working parts are in their best shape and haven’t faced the stresses of everyday driving: with a new car, you’re getting the engine at its best and most efficient.
Pro: Advanced technology
We’ve gone beyond heated seats, steering wheels and windows into a whole new world of cutting-edge tech. It’s changing how we drive. From practical innovations like enabling fuel efficiency to fun features like Amazon Alexa letting you call your tunes or even car to car communication, you can have it all. Built in.
New Car: Reasons NOT to Buy
A new car is expensive for a reason: you’re paying for the privilege of being the first to own and drive your car (check out our guide on depreciation). If you can afford that privilege, great! But if you’re borrowing to buy, through a bank loan or finance agreement, there will be other costs to factor in. A new car will cost more and that means your finance will too in terms of interest and possibly charges.
Con: You might have a wait
Patience is a virtue – especially if you’re waiting for your brand spanking new, built to order car! It can take up to 4-10 weeks to process, build and manufacture, and then possibly another 5 weeks for delivery depending on the distance from factory to dealer. You could be waiting up to four months for your new motor. That’s a drag!
Depreciation: losing value in year 1
Your car’s worth will likely dive in its first year. It’s one of the biggest disadvantages of buying a new car and you can find out more about it here. Driving a new car off the forecourt loses a chunk of it’s value – which can be up to 15%-35%. The good news is that the rate of depreciation slows with age so, with that in mind, it’s not a good financial move to sell in in the first or second year.
Insider insight: we know that if a new car is stolen or declared a write off, your insurance company will only pay out the current value of the car. This might be thousands less than you paid for it. You can protect yourself from this by looking into GAP insurance – this is designed to pay the difference and soften the financial blow.
Con: Higher insurance premiums
New cars are worth more - and are highly desirable to thieves - so it stands to reason that they’re also subject to higher insurance premiums. There are a few things you can do to keep your insurance premium as low as possible. Check your new car’s insurance group and use an online broker like us to compare lots of different insurers.
Con: Road tax has increased
Tax bands were reviewed in 2017 and it’s all now more complicated than ever! Always ask about road tax costs when buying so you’re not hit with a shocker when you go to get on the road. Most cars are now in the £140 per year bracket and those include some models that were previously tax free.
Used Car: Reasons to Buy
Pro: Get it now!
In a hurry? Too excited to wait? Used cars are most often ready for the road: they’ve at least been checked over, ideally independently, and had a valet. All you have to do is take it for a test drive, which you can also do on the spot, and make sure car checks, paperwork and payments are in order. Then you’re good to go.
Pro: It Can Still be New-ish
A used car doesn’t mean that it’s an ancient car! According to AutoExpress
When shopping for a used car, most buyers tend to aim for the ‘sweet spot’ when a car is three years old. This is because most new cars are bought on finance deals or company fleet leases which run for around 36 months, after this they are returned to the dealer or sold through auctions and usually find their way into the used car market.
Many dealerships offer one or two-year-old models too so it’s worth doing a little research and visiting some local dealerships.
Pro: Less tax to pay
The changes in the UK’s road tax brackets in 2017 don’t affect cars registered before that. So many low-emission cars will continue to pay little or no road tax – that’s good news for your wallet.
Pro: You can haggle
Haggling doesn’t just happen at car boot sales. It still goes on in dealerships and can pay dividends: you could save anything from a few pounds to a few hundred, so it pays to ask! If you’re not confident, ask a friend or family member who knows how to barter and won’t squirm under salesman’s techniques. Remember that you can simply stop the deal if you feel you’re being pressured into paying too much or buying extra features.
Pro: You can buy online
How convenient! Choose your car from your couch. Save your legs and start your research online, whether on a platform like Autotrader or Google dealerships near you. It’s all good research and will give you an idea of what’s out there and prices. Do try to look at car traders who have a good reputation and whose cars have been inspected by an independent engineer or motor organisation.
You might be sceptical of buying a car online but a lot of saving can be gained from online brokers who typically bulk buy popular models and can undercut on price as they don’t have the overheads a physical dealership would have - plus you don’t have to haggle!
Pro: Cheaper to finance
As used cars are much cheaper to buy than a new car, you will avail of lower repayments and in a lesser time period too. Essentially you are saving money but still have that “new car” satisfaction.
Used Car: Reasons NOT to Buy
Con: It can be a risky business
Buying a used car is more often than not, a game of chance. There are many unknowns and, generally speaking, pre-owned cars are less reliable than brand new models.
The older a car is, the more wear and tear it’s had. This is why the mileage is often a good indicator of the car’s general health. Service records are also invaluable in letting you know how well the car has been looked after.
Con: No warranty
If the car you’re interested is older than three years, it’s likely the warranty is already up. Buying from a private seller also means you lose out on this type of protection if anything goes wrong. Most dealerships tend to offer their own warranties which means you have some peace of mind. They can also include discounted service schemes to keep your car in good nick over the years - which will also help when you go to resell.
Con: Brexit price rises
Recent motoring research is indicating that cars coming from Great Britain may have their prices hiked because of the new VAT rules following Brexit.
Con: Choice is limited
Let’s face it: you’re not going to get the exact car you want in your preferred colour and ideal specification. You’ll have to keep an open mind, be guided by your budget and practical needs, and be willing to compromise! However, you might find that by getting the right balance gets you everything you need: the right car at the right price, one you can afford to insure and that you can rely on for a few years to come!