A new car is one of the most significant acquisitions you’ll make, when it comes to deciding on the right one, you need to have patience and ensure that you do a fair amount of research first.
But fear not, we’re here to tell you how, with tips and advice for every step of the way – making your car buying journey a breeze.
For many, a car is a necessity. It is vital for our job, getting around, dropping the kids at school, and for that weekly grocery shop. Although it is a major expense, we would be lost without it.
Luckily there are affordable ways of purchasing the right car. You have to be smart about it and invest the time and effort.
Buying a car
The first thing you need to do is consider all of the costs. Work out what you can afford by setting a budget and keeping track of your expenses and income.
Consider what you will use the car for. Do you barely drive? Is it for your daily commute?
Do you often go on vacation and take long drives?
It’s essential to know what to look for when buying a car. Make sure the vehicle is in good condition, be it a new or used car. Take it for a test drive and inspect it.
It’s a good idea to get a qualified mechanic to check it for you.
Check the warranty. In most cases, new cars come with a full manufacturer’s warranty, meaning if there’s a mechanical issue during the warranty period, it will be fixed at no additional fee.
If you are buying privately, then there’s usually no warranty. Whereas, when it comes to used cars from a car dealership, the warranty varies from car to car.
Get the car’s VIN or chassis number from the car dealerships or sellers and search the Personal Property Securities Register (PPSR).
If it is a used car, make sure the vehicle has not been written off, reported stolen, and has no debts by checking the registration with online services such as https://regcarcheck.co.uk.
And please. Read the contract carefully. Take your time with this. It is legally binding.
New car or used car?
A new vehicle often comes with high financing costs, but maintenance costs are generally low (mainly while still under warranty).
There’s also the perk that the car has no previous history. It’s got all of the latest features and technologies, and don’t we all love that new car smell?
But for some, their financial situation doesn’t allow for this, and they have to buy a used car. They’re just as dependable as new cars, just way cheaper.
You can save money on insurance costs, registration fees are usually more affordable, and you’re less likely to have manufacturer recalls.
Cost of a car
There are more costs involved other than just the actual car payment. The best books on personal finance recommend spending no more than 15% of your monthly take-home pay (this varies depending on your budget and personal finance).
So, what are the car expenses? Taxes, registration fees, repairs and maintenance, auto insurance costs, stamp duty, fuel costs, parking expenses, and highway tolls.
If you don’t have enough savings, you may need a loan to cover the costs. Consider the interest charges and loan length to figure out how much you can afford.
Remember, longer loans mean more time “underwater” on the new car payment.
You can buy through a dealership or from a private seller. Buying a used vehicle with cash is an option too.
If you pay cash, it generally means no monthly loan instalments, and you can do without collision insurance.
However, the car will probably have high mileage, so maintenance costs may be high.
Car insurance and car loans
Car insurance is vital, but it is the most significant ongoing expense for most people.
There are various factors to consider when it comes to insurance, where you live, your driving record, age, the type of vehicle (insurance companies worship statistics).
So get quotes and see which insurers have the best policies. Let’s take a look at a Kia Seltos, for example.
Compared to other vehicles in its category, it is relatively affordable when it comes to insurance. But think about the costs.
Can you afford to buy a car for more than £30,000 with an extra cost above £1,500 per year for insurance? Each monthly payment adds up. And car servicing will be incremental to this. Make sure you can afford it with your annual income.
Find financing that fits your budget and consider how much car debt you can afford for a car loan. Car loan payments can be a killer.
Note that the interest rate is linked to your credit score and when it comes to length, limit your loan to three years for a used vehicle and five years for a new one.
Consider all of these factors, and you’re good to go. Buying a new car does not have to be as daunting as it seems!