Six ways to find an affordable car
12/03/2008
Buying a new car is a big decision – and one that can easily drive you into the red. But there are ways to keep costs down in the hunt for your ideal motor.
Get on the right road by following our tips and doing a bit of simple homework.
Know what you need
The National Franchised Dealers Association recommends defining what you want from your new car. For example, do you:
- Need space for adults, children, your stuff, or all three?
- Prefer diesel, petrol or alternative fuel?
- Make mostly long or short journeys?
- Want automatic or manual transmission?
- Rate economy over performance, or vice versa?
- Want two, three, four or five doors?
Reviews in the press and on-line will help you narrow down your choices.
Look beyond the initial outlay
Depreciation in the first year of a car’s life can range from more than 40 per cent on some popular models to around 12 per cent on others. Over three years, according to Which?, the value can drop between 50 and 77 per cent.
So, check out car magazines, specialist web sites and dealers’ guides to find a model that will retain more of its value – especially if you plan to sell it on in a couple of years.
You also need to take into account running costs, in case what looks like a bargain at first turns out to be pain in the wallet. Use LowerMyBills.co.uk, to make sure you get a good deal on insurance – which will be one of your biggest ongoing expenses.
Know what you can afford
Start with your credit report – the personal history of the credit you’ve taken out, such as loans, cards and mortgages – plus your repayment record and other information that helps lenders to decide if you’re likely to repay what you owe.
First, it will give you a clear picture of your current borrowings and how well you’re managing them.
Second, it shows what lenders see when you apply for a car loan. They use information from your credit report as well as your application form when they decide whether to make an offer and how much interest to charge.
A good credit report showing that you make repayments on time and have not over-stretched yourself will make it easier for you to get the deals you want. So check it carefully to make sure it is up to date and accurately reflects your circumstances.
You can check your Experian credit report for free with a 30-day trial from CreditExpert, the online credit monitoring and identity fraud protection service.
Sort out the finance
You’ll probably already have a price range in mind but, unless you are a cash buyer, how much you have to spend will almost certainly depend on the finance deal you can get.
Taking advantage of the finance offered by your car showroom is a convenient option but it can be expensive, with an average interest rate of more than ten per cent. Finding a loan through LowerMyBills.co.uk could knock up to four per cent off that.
Make it clear that you only want information when you make enquiries. If lenders think you’re making multiple applications they may mistakenly believe that you’re desperate for money or even that a fraud is being planned.
Make sure the price is right
Many dealers will give an instant discount – if you’re prepared to haggle. It’s also worth checking magazines and the Internet to find the lowest prices for the car you want. If you can show that the car is available for less, you are more likely to get a good deal.
Manufacturers also often have special offers, such as 0 per cent finance, free insurance and extended warranties – but remember that these almost always have a hidden price. You may do better in the long run if you shop around.
Don’t buy a turkey
One in three used cars has something to hide, so it’s important to know your prospective motor’s history. Check out the buying advice at www.AutoCheck.co.uk and run an online report. It can tell you whether the car you are looking at is on finance, stolen or has been written off by a UK insurance company. You can also see whether the vehicle has had any plate changes, if there are mileage anomalies and how many keepers have been recorded.
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