How to Be Smarter with Your Money When Buying a Car

Buying a new car – exciting or daunting? The answer is probably a bit of both. You want the best set of wheels you can get for your budget, but how do you go about that when there are approximately a gazillion choices out there?

It all comes down to a bit of sensible preparation. Essentially, you need to know what you’re looking for and from where, and how you’re going to pay for it all down the line. To break down that rather broad statement, here are the key pointers on getting the process right.

Do you really need a brand-new car?

In an ideal world we’d all have brand spanking new motors to run around in, but there’s a huge disparity between the value of new cars and used ones, and therefore a massive difference between the price you’d pay.

If you’re not familiar with the concept of depreciation on new cars, get familiar quickly – because it could save you a lot of money. Typically, a new car will lose 15-35% of its value within its first year, indeed the moment it rolls off the shop floor. After three years, a new car tends to lose around a half its value.

Take the Audi A3, for example. A hugely popular car that starts new at about £25,000. Head over to Jardine Motors and you can get a few years’ old model from just upwards of £10,000.

That’s quite a difference.

Think ahead

Some cars depreciate more than others. A bright pink Maserati Quattroporte, for example, is the not-to-go-to for retaining value. A black Tesla Model S, however, is still worth 63% of its new value after the dreaded three years.

A car showroom

Bear this stuff in mind whether you’re buying new or used. If you plan to sell on down the line, consider your car an investment and not just a purchase.

Spread the costs to suit you

Once you’ve decided on your new car, the next question is how you’re going to pay for it. Ideally speaking you want to buy it outright, then the car is yours and you don’t need to worry about monthly payments. But coming up with the lump sum required can be difficult – which is where finance payments come in.

Look into the pros and cons of taking the finance route and how best to manage it against your budget and income.

Timing matters

The dealer you go and buy from has sales targets and deadlines to meet, and experiences their share of poor sales periods across the calendar year. Thus, there are points across each month and the year for you to take advantage of and try and get a better deal on your new car.

You can find out more about when and why that is here.

Cheap runners

That cheaper-than-you-expected sports coupe is looking tempting, but have you thought about how much petrol it’s going to gulp down just to get you to work and back? Again, it depends on your budget, but fuel costs can really impact your monthly spending.

A vintage Mini car

You might want to consider something a bit more economical to keep said costs down.

Know your limits

That cheaper-than-you-expected sports coupe is still looking tempting, but have you thought about what your insurer might want to charge you for the pleasure of covering it? If you’re a seasoned pro with 20 years’ no claims under your belt then it’s probably not going to be a concern. However, if this is your first car as an enthusiastic teen, you might want to reconsider.

Think about how your driver profile might impact your running costs, too.

If you don’t ask…

Finally, don’t be afraid to try a cheeky haggle. Cars are high ticket purchases. The dealer/seller wants to make a deal just as much as you do, so there is often some room to manoeuvre on the price (especially if you use the timing mentioned above to your advantage).

Ask yourself: what’s the worst that can happen? They say no. If you don’t like the price, you can just walk away. There are plenty, plenty more fish in the sea.

Those are your key pointers on making smart money moves on your new car. Now, go forth and purchase with confidence.

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